Investors fail to see light as trading drops

INVESTOR confidence has crumbled to its lowest ebb for eight years, according to a bleak market analysis released today.

The grim data shows the value of shares traded this year has plummeted as the UK’s recovery from recession remains on a knife edge.

The turbulence from the economic crisis triggered by the collapse of Lehman Brothers in 2008 has also produced the most sustained market volatility in 26 years, according to the research from equity trading specialist Equiniti.

This year £2.5 trillion of UK equities will be traded on current trends – almost two fifths below the peak in 2007 when £4 trillion changed hands.

The value of shares traded in 2010 relative to the value of UK plc is the lowest since 2002.

On average shares worth 1.56 times the value of the market were traded each year over the last ten years, meaning 2010 is still below both recent averages.

It is even below 2009 when the UK was in the grip of recession.

Meanwhile the Treasury has also been hit as 2010 tax on share trades will fall an estimated £1.1bn on 2007.

Equiniti chief executive Wayne Story said: “Britain’s ultimately unsustainable economic boom was reflected in stock market activity too. The euphoria of the five-year bull market up to its peak in June 2007 brought a massive increase in share trading volumes, far ahead of anything the UK had ever seen before.

“There has been a dramatic loss of energy in the stock markets since then. Today, the markets are still in post-Lehmans shock.”

The research also revealed that in cash terms more shares changed hands in the five years to the end of 2007 than in the previous fifteen years since 1988 put together as the markets enjoyed a boom.