AG Barr and SSE in demand as Scots investors 'stay local' with stock selection

When it comes to ploughing their pounds into the stock market, armchair investors in Scotland are far more likely to back local companies, new research suggests.

Scots are up to five times more likely to invest in a firm with a major presence in their home town or city, according to a study by social trading and investing platform eToro. The data shows that the proximity of a company can have a major bearing on the proportion of the local population who own shares in it.

For example, nearly six times (574 per cent) as many investors living in and around Glasgow back Irn-Bru maker manufacturer AG Barr, which is headquartered not too far off in Cumbernauld, compared with the UK average. When a greater proportion of the local population invests in a company than the average for the rest of the country, that stock is described as “over-indexed”, eToro noted. DIY investors in Glasgow are also heavily over-indexed on Iberdrola, the owner of ScottishPower, which is headquartered in the city.

Scottish Mortgage Investment Trust, which is managed by Edinburgh-based Baillie Gifford, and Perth-based energy heavyweight SSE are also popular with retail investors in their respective home cities. Meanwhile, investors in the Scottish capital are also significantly over-indexed in Iberdrola (279 per cent), Scottish Mortgage Investment Trust (by 177 per cent) and AG Barr (90 per cent), according to the report. There is also a greater weighting (28 per cent) among Edinburgh investors to NatWest Group, parent company of Royal Bank of Scotland, which has its HQ operation at Gogarburn on the outskirts of the city.

Investors in Aberdeen also love Irn Bru as much as the rest of Scotland, with AG Barr up 303 per cent. They also have a considerable overweighting towards energy stocks and companies linked to the oil and gas industry. The French energy giant TotalEnergies is over-indexed by 317 per cent, Tullow Oil by 211 per cent, RWE by 134 per cent and SSE by 133 per cent.

The research comes amid a backdrop of a shrinking Scotland plc. Recent years have witnessed the acquisition of well-established publicly-quoted businesses including Edinburgh-based aviation services heavyweight Menzies, Glasgow-based temporary power specialist Aggreko and Perth-headquartered transport giant Stagecoach. A handful of much smaller companies have undertaken initial public offerings and come to the main London exchange or the junior Alternative Investment Market (Aim).

Dan Moczulski, UK managing director at eToro, said: “One of the basic tenets of good investing is to back what you know and understand - and it’s clear that Scottish investors follow that advice when it comes to constructing their own portfolios. Whether it’s west coast investors backing their favourite drinks brand or Edinburgh users loading up on Scottish Mortgage shares, people are much more likely to invest in the businesses that are famous in their own region or city.

“We have seen a ‘buy local’ trend in wider society develop in recent years, where consumers seek out local produce over goods produced far away from where they live. A similar trend is clearly emerging when it comes to investing. Buying stock in a certain company has become a more social, community-driven activity.”

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