Foreign investors taking a bigger share

The Office for National Statistics (ONS) said 53.2 per cent of UK quoted shares were owned by investors outside the UK in 2012, up from 43.4 per cent in 2010.

A glut of international mergers and acquisitions and easier access to shares by foreign investors has driven a swing in the ownership of UK quoted firms since the 1990s, statisticians said.

Less than 20 per cent of the UK stock market was owned by foreign investors 20 years ago.

Of the £935.1bn stake owned by foreign investors, North Americans own the biggest slice, worth £451.9bn, followed by Europeans, who own £241.3bn.

Meanwhile, stock holdings by pension funds and insurance companies, traditionally two of the biggest investors in UK shares, have plunged to all-time lows.

UK pension funds’ holdings of shares has fallen to 4.7 per cent, down from 5.6 per cent in 2010 and 21.7 per cent in 1998, possibly reflecting fund managers’ search for higher returns and lower risk.

Insurance companies’ stake in the UK stock market is down to 6.2 per cent from 8.8 per cent in 2010 and 21.6 per cent in 1998, which the ONS said could reflect a switch to alternative assets.

Stock holdings by individual UK investors rose to 10.7 per cent from a record low of 10.2 per cent two years earlier.

The public sector owned 2.5 per cent of the UK stock market – worth £44.1bn – largely due to government bailouts of Royal Bank of Scotland and Lloyds Banking Group at the peak of the financial crisis in 2008.

The value of UK stocks edged up 0.2 per cent to £1.76 trillion from £1.75 trillion two years earlier, with the FTSE 100 Index accounting for 85.1 per cent of the total value of the stock market.