UK stocks are being stung by national risk aversion with Brits “low emotional capacity for risk” triggering widespread under-investment.
Nearly six in ten Brits were unwilling to face the prospect of short-term losses on investments, according to Fresh research from Oxford Risk found and the UK’s second largest platform for private investors, Interactive Investor.
Over 30 per cent held the financial resilience to take on riskier investments but were held back by an averse mindset.
The investment platform found this led to investors opting for low-growth assets due to fears over short-term volatility harming financial security.
Richard Wilson, chief executive of Interactive Investor, said the “safety-first instinct” of Brits posed a “serious challenge for the UK”.
The lack of enthusiasm in the UK markets comes as countless City firms eye overseas prospects or become snapped up by private equity giants.
Fintech darling Wise announced intention to transfer its primary listing to the US last month in a bid to attract a deeper pool of liquidity and pharma juggernaut Astrazeneca is also reported to be weighing the move.
The loss of Astrazeneca would be a crushing blow to the London Stock Exchange with the firm retaining the highest market cap on the index of £160bn.
Renewed calls to ditch stamp duty
Wilson urged the “pulling of all levers” to strum up better investment prospects.
Chancellor Rachel Reeves used her Mansion House speech to urge Brits to invest more into stocks as she unveiled a campaign where high street banks will alert customers about investment opportunities and provide support with moving cash into stocks.
Wilson said: “Targeted support will help but we need a multi-prolonged approach from the Government to lay the foundations for a broader cultural movement”.
The investment chief renewed calls for the scrapping of stamp duty on UK shares – a call which has echoed through the City in the last year.
Chiefs of London-listed firms have blasted the levy on investing for dampening UK stock prospects.
Steven Fine, chief executive of Peel Hunt, told City AM ditching the tax would help “shift this doomloop of negativity that seems to pervade the country.”