There’s a Reason Why UK Stocks Need UK Owners
Local shareholders used to support London cash calls, bringing global investors with them. Their retreat means hedgies filled the gap — to companies’ detriment.
The UK stock market has paid out big dividends this century. Yet the index has gone nowhere.
Photographer: Simon Dawson/BloombergThe increasing presence of international investors in the UK stock market looks at first glance like a success story for London. But it’s really a tale of declining domestic ownership and a resulting leadership vacuum among shareholders. In theory, the nationality of owners shouldn’t matter. In practice, the withdrawal of the home crowd puts UK companies at the mercy of opportunistic hedge funds when they need to raise cash.
International ownership of UK stocks rose to 56% in 2020 from 36% in 2004, according to the latest data from the Office for National Statistics. The shift reflects regulation that strongly incentivized UK pension funds to dump equities.