For some time, there has been concern that the London Stock Exchange (LSE) underperforms in comparison to similar indices in the US and Europe.
Recently, a number of UK companies have chosen to list on US exchanges, where they believe their true value will be better recognised.
The latest report on UK share ownership by the Office of National Statistics (ONS), (December 2023 based on 2022 data) details substantial changes in the proportion of quoted shares owned by different types of investors.
For example, overseas investors owned 57.7% of the value of the UK stock market, a record high and up from 36% twenty years earlier. UK insurance and pension companies held under 5% of UK quoted shares in 2022 compared to about a third in the early 2000s.
Overseas companies may consider UK company shares relatively cheap, which means they could get better returns on their investment. They may increase their holdings of a particular UK company with a view to taking it over. This could be good news for a UK investor who holds shares in that company.
Taking a longer view, the difference between the FTSE (Financial Times Stock Exchange) 100 performance and major indices in the US and Europe is noticeable. Over 10 years, the FTSE 100 has grown by approximately 24%, compared to over 180% for the Standard and Poors 500.
Past performance is not a guarantee of future results, and this article is not intended as financial advice. Hartey Wealth Management offers investment planning in Cheshire and Shropshire, and would be happy to discuss an overseas component suitable for your portfolio.
