Don’t overthink ownership data! Thoughts from Ben Kumar @7IM

by | Dec 6, 2023

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Every couple of years, the Office for National Statistics releases it’s “Ownership of UK quoted shares” report. And it’s just come out. There are, basically, two takes you’ll see reported over the next week.

The first take is below: (headline from The Telegraph, data from the ONS)

Source: 7IM/ONS/The Telegraph

 
 

And it usually leads to hand-wringing about the sorry state of British businesses as a home for investment. The ONS speculates that it might be because pension funds are “expecting more profitable returns on overseas shares”. And politicians start to view this as a possible source of cash, just waiting to come home, given the chance. 

But then here’s the other take (headline from The Times, data from the ONS, exclamation marks mine):

Source: 7IM/ONS/The Telegraph

 
 

And this version usually leads to worrying about UK Plc being asset stripped, or not under British control and so on.

So what’s the right take? Is Britain an awful place to invest, or is it full of juicy pickings?

Well, neither.

 
 

There are a few things to remember.

  • The first thing is that UK pension funds have had various bits of regulation over the years which have pushed them into holding more Gilts and other government bonds. You can’t ignore the FCA on the grounds of equity market patriotism!
  • The second thing is that foreign investors are just as keen for returns as UK pension funds. No one’s buying UK assets out of sympathy or nostalgia!
  • The third, often forgotten, and arguably most important point, is that this has happened everywhere. Over the last fifty years, investors around the world have seen new (and exciting!) markets open up. The United States has seen exactly the same trend (see below in the reddy-orange)!

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