Foreign buyers take record stake in UK plc

Foreign investors have upped their stake in British industry to record levels, according to new figures.

Analysis of shareholder registers by consultancy Orient Capital found that UK companies now have investors from a total of 107 countries and ranging from banks to insurance companies and funds, charities, governments and private shareholders.

Foreign holdings of UK shares have risen steadily over the last decade to stand at 66 per cent, up eight percentage points since 2013 alone, and up two percentage points since 2019.

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US investors are by far the largest foreign holders of British shares, owning 28 per cent of the London market in 2021. Almost three fifths of this is held by US mutual funds. Along with their Canadian neighbours, US mutual funds now own £1 in every £6 of UK shares, up from just £1 in £9 in 2013, making them the largest shareholders in British companies, bigger even than British unit trusts that now own £1 in every £7.

Foreign investors have been increasing their holdings in the shares of UK listed companies. Picture: Peter Macdiarmid/Getty Images.

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The figures also show that foreign investors are most interested in UK-listed mining, healthcare and consumer goods companies.

However, Orient Capital said internationalisation is a “two-way street”. Fund flow data from global funds network Calastone shows that since the beginning of 2015, UK investors have added £49 billion to UK-domiciled unit trusts investing in overseas equities.

The data also shows that the share of the UK market owned by UK pension funds has fallen sharply since 2013, from 8 per cent to just 2 per cent. Orient Capital said this was down to factors including international diversification and partly because liquidity rules have pushed pension funds into more fixed-income assets.

Alison Owers, global CEO of Orient Capital, said there is a “natural end point to increasing internationalisation”. She added: “British investors will always need to be more heavily weighted in domestic assets than the UK market’s share of global stock market value because most British people will retire here, meaning their future sterling liabilities should be matched to some extent by sterling savings.

"Many UK-listed companies operate mainly in their home market, so they make good candidates for this element of our savings and investments.”

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