Share-buying up as stock market confidence grows

The amount consumers have invested in shares has reached its highest level for more than three years as people's confidence in the stock market grows, research today reveals.

Private investors collectively had 233 billion invested in shares at the end of February, the highest level since November 2007, according to share registration group Capita Registrars.

The group said the rise reflected both the recent stock market recovery, and the fact that people were increasing their holdings in equities, with 473 million of new money invested during the three months to the end of February.

But it said the sudden stock market correction following the Japanese tsunami had significantly hit the value of individuals' holdings, wiping some 16bn off private investors' portfolios, although half of this had been recovered by last week.

At the end of February, shares held by private investors accounted for 11.8 per cent of the UK stock market, the highest level since August 2009, and significantly above the low of 10.9 per cent reached in May last year.

Charles Cryer, chief executive of Capita Registrars, said: "With cash offering such paltry interest rates, bond yields exceptionally low, and property on shaky ground, private investors have been attracted by strong dividend yields and the recovery in corporate profits."

But the group said turnover in the level of shares that investors were buying and selling had been markedly lower during the past six months than in previous periods, as people focused on adding to their holdings, rather than repositioning their existing portfolios to reflect changing economic and market conditions.

Investors are also buying both defensive shares, which provide steady profits and good dividends, and more cyclically sensitive shares, which receive a disproportionate boost from an economic recovery.