Private investors have avoided more than £2bn in potential losses by selling out of bank shares ahead of the global financial crisis and subsequent government bailouts, according to Capita Registrars.
New data from the UK’s largest administrator of company share registers shows that private investors sold £640m-worth of their bank shares in August and September, having already offloaded £4.2bn of financial stocks by the end of September 2007, before the FTSE Banks sector lost 50 per cent of its value.
As a result, the value of all private shareholdings fell to a record low of £138bn at the end of September and Capita estimates that it collapsed further to £109bn on October 16. This suggests private shareholders now own just 9.6 per cent of the UK’s listed companies – the lowest level since the privatisations of the 1980s.
Capita’s findings are backed up by TD Waterhouse, the stockbroker, which on October 10 reported “a notable 43 per cent increase in sales since last week, as the turmoil gripping the markets intensified”.
Selling in the financials sector has been heavier than in any other – with £5.1bn-worth of bank and insurance shares sold since September 2006, compared with £3bn of consumer services shares and £2.6bn of oil, gas and basic materials shares. However, private investors have been adding to their defensive holdings – buying £2.1bn of healthcare equities and £1.5bn of utilities over the period.