Investors Chronicle: Private investors take their money and run - 01.05.2006
Investors Chronicle, 5 May 2006
Private investors withdrew GBP3.1bn from the stock market in February and March, according to research by share registration provider Capita Registrars. The company says that the cash withdrawals were across all sectors, although most money was pulled from financial and oil and gas companies. Around GBP907m was withdrawn from the financial sector, while GBP843m was pulled from the oil and gas sector.
Capita Registrar's corporate services director, John Roundhill, refused to divulge the individual companies, but said that there was a wide spread of share sales across Aim and the main market. He argues that the increase in bad debts reported by banks during the spring reporting season may have encouraged selling, while shareholders took profits from oil and gas firms, and tried to call the top of the energy price surge. Mr Roundhill also claims that the research shows that sales of individual share individual savings accounts (Isas) may have flopped.
"There have been press reports that Isa sales have been strong this year," he says. "But the data seems to indicate that it is investment trusts and collective investments Isas that are strong, not individual share Isas. People have seen an exceptional performance by the stock market and they're taking off the top of their investments and moving into collective investments."
Proportionally, the consumer goods and IT sectors saw the least amount of selling, according to Capita, while the healthcare sector experienced the largest amount, dropping 5.5 per cent. Private investors own 11.4 per cent of the London stock market, or GBP198bn-worth of shares, and sold 1.6 per cent of their holdings during the period.
But Hilary Cook, director of investment strategy at Barclays Stockbrokers, insists that investors are not selling out. "That's not our experience," she says. "Our private client advisors say clients are dealing quite heavily. But it may be that they are switching out into funds, and thinking more longer term."
And stock market research boutique Compeer claims that there was nothing significant about Capita's findings. "There has been more selling going on in the first quarter, but it was not exceptional," says managing director Alison Malton. "This would suggest investors are taking profits, but it is not a major shift."
Capita's study also shows that investors from the Channel Islands have the biggest share portfolios, with an average share holding per person of GBP5,111. Investors in the Wales have the smallest holdings, with an average share holding of GBP1,538 per person.