Led by US, foreign investors hold 54% of UK stock market

By MoneyTimes

Sep 03, 2015 09:44 PM EDT

The holdings by rest of the world in UK stock market in 2014 stood at 54 percent and this remains at the same level of that in 2012. However, there's much increase in foreign investors' holding when compared with 31 percent in 1998.

Overall, US investors get lion's share of 46 percent of overseas holdings in the UK stock market. 

According to latest data from Office for National Statistics (ONS), individual investors accounted for 12 percent of the market in 2014 and this was up from 10 percent in 2010 and 2012. The holdings of insurance companies and pension funds continued to decrease while churches and charities have doubled their holdings volume though

it accounted for less percentage in the total market holdings. Churches and charities hold 1.2 percent of the market in 2014 and this was up from 0.6 percent in 2012, as revealed by the bi-annual study of ONS.

Foreign investors' holdings of 54 percent in UK Stock market were worth GBP1.7 trillion ($2.6 trillion) of the stock in UK stock market. During early 1990s, the foreign ownership in UK equities was about 20 percent of what it was in 2014.

Foreign ownership in UK Stock Market crossed 10 percent mark in1989 and it took eight years to breach 20 percent market in 1997 and just one year to cross 30 percent in 1998. Then it took about a decade to cross 40 percent level in 2008 and breached 50 percent level in 2012. It was at the same level in 2014 as well.

The US investors hold lion's share in the overall foreign holding in UK stock market. The 46 percent of the US investors' holdings was worth GBP929billion ($1.4trillion). After North America, Europe investors accounted for the second largest holding in the UK Stock market.Europe's holding was in the range of 25-30 percent of total foreign holding in the UK stock market followed by Asia with 15-20 percent. 

Other nations that accounted for below 10percent holdings include Africa, Middle East, Australia and Oceania, South and Central America and offshore UK.

Pension funds' holdings touched historic low of only three percent of total foreign holding in UK Stock Market. Pension funds are often in news whenever we talk about major market movers. There's general impression that pension funds have a significant influence on FTSE movements.

Pension funds lowering their investments right from early 1990 when it used to be a huge 32 percent holding in UK stock market. It's been a nose diving for Pension funds' holdings in foreign ownership from 32 percent to just three percent. 

During 1989 to 1993, pension funds' holdings were above 30 percent in foreign ownership on UK stock market. It slipped below 20 percent in 199 and since then it continued to decrease exposure in UK equities. 

Pension funds' holdings were hovering above 10 percent until 2008, but from 2010 onwards it steeply fell.

ONS study observes that major reason for this decrease in holdings is that pension funds are switching to less volatile gilts. 

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