Shareholding slumps among UK individuals

SHARE ownership among British individuals has fallen to an all-time low while foreign investors’ stakes in the stockmarket have risen, official figures published yesterday show.

At the end of 2008, individual investors owned just 10.2 per cent of the stockmarket, according to the Office for National Statistics. The number represents a decline from 12.8 per cent in 2006 and a huge slide from the peak of Margaret Thatcher’s privatisation programme in 1989, when 20.6 per cent of the country’s shares were in individuals’ hands.

At the same time, overseas holdings in UK stocks rose to 41.5 per cent at the end of 2008.

Observers said the statistics reflected the growing use of managed funds by private investors as a way to access equities, as well as a shift in corporate culture in favour of institutional shareholders.

Eric Chalker, a director of the UK Shareholders’ Association, said the pattern was negative for British business life. He cited the imminent takeover of Cadbury by US conglomerate Kraft as an example of a deal that could have been averted had a large chunk of Cadbury’s shares been owned by individuals rather than hedge funds and banks.

“It’s a bad trend because it’s depriving companies of investment which they could have and it’s stopping investors thinking about the companies they’re putting money into,” Chalker added.

However, Ben Yearsley of Hargreaves Landsown pointed out the surge in popularity of nominee accounts meant the numbers were misleading. “Anyway, the decline in direct share ownership isn’t a good or a bad thing,” he added. “Most people don’t have the time to do the research needed for direct share ownership.”