London Stock Exchange Transaction Survey Shows Foreign Investment Increasing

London's equity market is attracting more foreign investors - with the biggest increase coming from US institutions trading European equities - according to figures released by the London Stock Exchange on June 9. The survey of London Stock Exchange Transactions shows that the proportion of deals in UK stocks conducted on behalf of foreign clients rose to 36 per cent (by value) in November 1998 from 20 per cent in 1996. The survey based on a sample of 60,000 transactions during an average business day, is the first detailed study of market transaction trends since the introduction of electronic trading for the most liquid stocks. The research also reveals a continuation of the trend toward lower commission rates with the average rate for UK equities down six basis points to 0.15% of transaction value from 0.21 in 1996. Other features of the report include: US institutions represent 24.5 per cent of total client trading of UK equities in London with an average bargain size of £1 million; the value of private investor business has increased in absolute terms from an average daily value of £125 million in 1996 to £320 million in 1998. However, due to the huge increases in overseas institutional business, private investors now account for 7 per cent of the total value of all trading in UK equities - down from 8.8 per cent in 1996; the average bargain size for UK equities is £68,000 compared to £223,000 for overseas equities; overseas institutions conduct larger trades than their UK equivalents, with over 75 per cent of their deals valued at over £1 million - UK institutions conduct 43 per cent at this level. The Exchange said: "The survey provides a valuable insight into the workings of the new market structure and emphasises London's role as a leading centre for cross-border equity trading."