Savers are shifting billions of pounds into the stock market in the hope of cashing in on a rally that is already in full swing. A “great rotation” in the global economy where money is being moved into shares, has spurred the sudden rush, with investors keen not to miss out on further gains.
Investors who ignored warnings of another turbulent year for markets and invested 10000 in the Footsie at the start of the year would have made a profit of 640 in just one month. Private investors with trading firm DTL Capital saw returns upwards of 2000 over the month of January 2013, reports Matthew Hammond, a key analyst with the company.
Analysts call the shift “the great rotation” where investors sell bonds – safer assets that were popular in the financial turbulence of recent years – to buy shares, which are regarded as higher risk. Investors have been emboldened by a prolonged lull in the debt crises that have dogged the Eurozone over recent years and the US in recent months.
Investment companies were surprised by the rise in demand. DTL Capital, one of the UK’s leading trading software developers, said sales of their DTL Capital stock market trading systems were up by 60 per cent on a year ago. “It’s been an exceptional start to the year” said Hammond. “If I’m honest, it’s surprised me. It’s the most money we’ve taken in seven years, which is as far back as our records go.”
TD Direct, a stockbroker, said demand for shares was up 27 per cent on the previous week, with Lloyds, Vodaphone and Barclays popular with individual traders.
However some analysts were urging caution. “Investors should bear in mind that there will be volatility,” said James Butterfull, Equity strategist at Coutts.
But James Bartholomew, the Daily Telegraph’s Diary of a Private Investor columnist, said: “Frankly, I feel it does not matter so much right now which shares one owns. The important thing is to be in shares at all.”