Monday 7 June 2021 6:00 am

Foreign investors now own 66 per cent of London-listed shares, data shows

Foreign investors have upped their stake in British industry this year to a record 66 per cent, extending the global ownership of London-listed stocks.

Investors in 107 countries were identified in new analysis of UK shareholder registers by investor relations consultancy Orient Capital.

Foreign holdings of UK shares have risen steadily over the last decade, up by eight per cent since 2013 and two per cent since 2019.

“The UK stock market, in common with leading stock markets around the world, is dominated by big multinationals whose operations span every continent and compete with global peers, wherever they happen to be listed,” said Alison Owers, global CEO of Orient Capital.

“There is therefore no logic for investors only to consider companies that happen to be listed at home.”

Who is investing?

US investors are the largest foreign holders of British shares, owning 28 per cent of the London market in 2021.

Along with their Canadian neighbours, US mutual funds now own £1 in every £6 of UK shares, up from just £1 in every £9 in 2013.

European investors have increased their holdings the most in the last two years, and now claim a 19 per cent stake, up from a 15 per cent post-referendum low.

Elsewhere, Chinese investors have doubled their ownership from 0.7 per cent in 2019 to 1.7 per cent this year.

Foreign investors are most interested in UK-listed mining, healthcare, and consumer goods companies.

The UK’s army of retail shareholders now owns just £1 in every £12 of the UK market, which is unchanged from two years ago.

What about UK investors?

Internationalisation is a two-way street, and UK investors have increasingly invested overseas.

Fund flow data from global funds network Calastone shows that since the beginning of 2015, UK investors have added £49bn to UK-domiciled unit trusts investing in overseas equities.

Over the same period, they have only invested £3.6bn into UK-focused equity funds.

“Stock markets everywhere tend to have a sector bias that make them obvious targets for investors interested in a particular industry exposure, or keen to balance out skewed sector weightings in their home market. This is a healthy trend,” Owers added.

“As UK investors have looked further afield to find the best opportunities and to maximise the benefits of diversification, foreign investors have come to our shores.”