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Saturday 21 September 2019

Foreign ownership of UK shares reaches record high

Foreign-owned shares accounted for over half of the total value of UK shares in December 2016.

Canary Wharf
Canary Wharf

By Peter Cary, Press Association

The proportion of UK company shares owned by foreign investors has reached another record high.

Some 53.9% of shares on the UK stock markets belonged to the rest of the world at the end of last year, according to new figures.

This is a small rise on the previous high of 53.7% recorded in 2014.

London Banks Stock

By contrast just 12.3% of shares in 2016 were owned by UK individuals.

The figures, from the Office for National Statistics (ONS), put the value of UK domiciled company shares at £2.04 trillion, making the foreign-owned shares worth around £1.09 trillion.

The latest rise reflects the steady increase in foreign investment in the UK since the early 1990s, which saw the proportion of UK shares owned by the rest of the world pass 25% by 1997 and 50% by 2012.

Foreign investment in UK shares

North America accounted for the largest proportion of foreign shareholders, holding 48.1% of the total value of all foreign-owned shares.

European investors were the next largest foreign group (25.7%), followed by Asia (15.5%), Africa (4.1%) and the Middle East (2.9%).

Offshore UK investors accounted for the smallest proportion of any group based outside the UK, with 0.6% of all foreign-owned shares by value.

London Stock Exchange screen

The figures also showed that UK unit trust ownership returned to a previous high of around 9.5% of the total value of UK company shares, last seen in 2012.

Other UK financial institutions accounted for around 8.1% of the total value, up 1% from 2014, but ownership by UK insurance companies decreased by a similar proportion, from 5.9% in 2014 to 4.9% at the end of last year.

UK pension funds owned around 3% of the total value of shares in UK companies, and private non-financial companies owned 2.2%.

UK charities and church ownership was the lowest of any single group, at around 1% of the total value of all UK company shares at the end of last year.

All shares included in the data were from companies that traded on the London Stock Exchange and were based in the UK, the ONS said.

Proportion of UK and foreign share ownership

The general rise in foreign ownership of UK company shares since the early 1990s stands in contrast to a long-term decline of UK individuals’ ownership.

In 1963, 54% of the total value of all UK company shares was owned by UK individuals, compared to just 12.3% in December 2016.

This long-term reduction in part reflects the “increasing internationalisation of the London Stock Exchange over the period”, the ONS said.

The latest proportional decrease in ownership by UK insurance companies also furthered a general downward trend in investment by that sector, from a high of 23.6% in 1997 to 4.9% of the shares’ total value last year.

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