News: Punters Pump £1 Billion Into Shares
Private investors ploughed nearly £1 billion into shares during August and September, reversing a downward trend of market scepticism shown in the previous 12 months.
Private investors ploughed nearly £1 billion into shares during August and September, reversing a trend of market scepticism shown in the previous 12 months.
The report by Capita Registrars said that share buying had outweighed selling for the first time in a year, as private investors poured £999 million back into equities. Investors had previously sold off £7.4 billion worth of shares between September 2006 and July this year, focusing their holdings on defensive sectors such as food, tobacco, and utilities.
(Defensive shares are companies whose sales and profits tend to be resilient in economic downturns and whose shares often perform better in falling markets.)
Despite the recent stormy conditions in the financial sector, private investors added £833 million to their financial portfolio during August and September. After a recent bout of consistent selling, investors took advantage of the upheaval caused by the credit squeeze, bolstering their holdings in this sector again.
There was also a similar reversal in the oils, gas and materials sector, as investors added £405 million to their holdings. Utilities also remained ever popular, continuing to be the most consistently favoured sector over the past twelve months.
However, Capita did comment that this rejuvenation in the financial sector could be premature as the credit squeeze continues to unravel. The data does not reflect the Northern Rock (LSE: NRK) crisis which hit the financial sector in mid-September.
It's worth pointing out that overall trading levels are only experiencing a mini-revival compared to the last few months. Stocks traded during the previous eight months are at the same levels combined as the period between December 2006 and January 2007 (£6.8 billion).
Capita also highlighted other possible factors which could influence share buying over the coming months.
John Roundhill, director at Capita Registrars added: `It will be interesting to see what impact the recent changes to the capital gains tax rules will have on private investors. For example the new rules have removed an advantage of investing in AIM stocks and of holding employee shares for the long term.'
More: Smarter Than The Average Bear | A Tax Bombshell For Investors