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Shares investment reaches peak

Consumer investment in shares has reached its highest level since late 2007 as confidence in the stock market increases, a survey has suggested.

Private investors had a total of £233 billion invested in shares at the end of February, the highest level since November 2007.

Registration group Capita Registrars said the increase reflected two factors - the recent stock market recovery and an increase of holdings in equities. The latter aspect saw £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 around £16 billion 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.

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.

Copyright © Press Association 2011

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