UK Retail Equities Market 2007

Table of Contents

• Overview
  • Catalyst
  • Summary
• Executive Summary
  • Market Context
  • Distribution Dynamics
• Table of Contents
• Table of figures
• Table of tables
• Market Context
  • The retail direct equity market continues to recover
    • However, equity is growing at a slower rate to the total retail asset market due to investor interest in alternative asset classes
  • Domestic retail investors account for less than 20% of the total domestic equity market flow
  • Total retail equity balances reached £435 billion in 2006, with quoted shares accounting for around 62%
  • Both capital appreciation and net inflows declined between 2005 and 2006
  • Equity performance has been boosted by the steady recovery of the FTSE 100 index from its low point in 2003 to a 5 year high in April 2006
  • Individual share ownership has fallen across the board since 2002
    • The level of direct equity ownership remains highest in the South of England
  • 55-64 year olds remain the most likely individuals to maintain equity holdings
    • All age groups have decreased their equity holdings since 2004-2005, excepting the static 85+ age band
  • Males are more likely to hold equity than females by approximately 3%
  • Individual share ownership has fallen across every income band since 2004-2005
    • There remains a strong correlation between wealth and equity investment
  • Datamonitor predicts a collapse in the retail equity market around 2008
    • The UK retail equity market is predicted to see a significant downturn between 2008-2009 before recovering in 2010
      • In the UK
      • In the US
      • General
  • Key equity products include spread-bets and CFDs
    • Spread-betting
      • Spread betting offers some significant investment advantages to traditional equity
    • Contracts for Difference
    • Market Conditions are positive for derivatives
  • Regulation
    • Execution-only direct equity trading is unlikely to be significantly impaired by MiFID
    • MiFID is likely to have a positive effect on sales of CFDs
    • ...However, MiFID may also increase administration costs and lose investors
    • There have been rumours of a removal of stamp duty on share transactions
      • Some regard stamp duty as unsustainable
      • ...While some believe its tax revenue to be politically irreplaceable
• Distribution Dynamics
  • Online distribution is the future of equities trading
    • Growth in online trading is linked to increased confidence in the stock market
      • Levels of growth may be unsustainable
      • Investors are more sophisticated than ever before
    • Online trading is easier and cheaper for both brokers and investors
      • Online trade pricing has a number of common features and advantages
      • Online trading has had some notable disadvantages
  • Developing the online trading industry is vital
    • Nominee accounts are the future after government legislation in 2006
    • Personal CREST accounts were growing in popularity, but have fallen behind
    • Dematerialization suggests the creation of an electronic compromise
  • Profiles of leading online providers suggest strong competition
    • Hoodless Brennan is the best-value UK online share dealer
    • The Share Centre targets a broad range of investor groups
    • Hargreaves Lansdowne offers a wide product range
  • Spread-betting and CFDs have developed into an online phenomenon in Britain
    • Education is the key
    • The customer base for spread bets has expanded
    • The UK market looks set to grow for spread bets and CFDs
    • The distribution model must develop if the market is to continue to expand
• APPENDIX
  • Methodology
  • Further reading
  • Ask the analyst
  • Datamonitor consulting
  • Disclaimer
  • List of Tables
    • Table 1: Balance of retail assets held in direct equity, 2002-2006
    • Table 2: Direct investment in domestic equity markets flows, 2002-2006
    • Table 3: UK retail equity balances by cBreakdown of UK retail direct equity balancBreakdown of UK retail direct equity balances and net inflows, 2002-2006
    • Table 4: Breakdown of UK retail direct equity balances and net inflows, 2002-2006
    • Table 5: FTSE 100 historical prices 2002-2006
    • Table 6: Level of direct equity ownership among UK households, 2002-2006
    • Table 7: Age range of UK adults holding equity, 2002-2006
    • Table 8: Proportion of males/females in each age band with shares, 2005/06
    • Table 9: Proportion of households in each total weekly income bracket with shares, 2002-2006
    • Table 10: Retail Equity Market Forecast, 2007-2011
    • Table 11: A selection of leading UK online share dealers
  • List of Figures
    • Figure 1: The UK retail equity market has grown by over 10% since 2002
    • Figure 2: Domestic retail investment is growing at a similar pace to non-retail and foreign investment
    • Figure 3: Unquoted shares are seeing negative growth compared to strong increases in quoted share balances since 2002
    • Figure 4: Breakdown of UK retail direct equity balances and net inflows
    • Figure 5: FTSE 100 prices have risen steadily since 2003, breaking the 6,000 point barrier in April 2006
    • Figure 6: The South East saw the strongest growth in share ownership between 2005-2006
    • Figure 7: UK adults aged 55 to 64 maintain the most equity holdings in the UK
    • Figure 8: Males between 55 and 59 are the most likely group to hold equity in the UK
    • Figure 9: Households with an income of over £1,000/wk are the most likely to own equity in the UK
    • Figure 10: The retail equity market in the UK will decline by an average of 3% between 2007 and 2011