Stocks and shares investment in Scotland slumps by 14% in the final quarter of 2020
The value of all new stocks and shares ISA policies opened by savers in Scotland in Q4 2020 fell by -14% on the previous quarter, with only the North East and the East of England registering bigger decreases, according to new data released by Scottish Friendly.
The value of new adult ISA investments made by Scottish customers in the final three months of 2020 was also down by more than a quarter (-26%) on Q4 2019.
By comparison, the value of all new policies from UK customers remained flat between Q3 and Q4 of this year, while year-on-year total UK policy sales dropped by just -10% in the final quarter of 2020.
Scottish Friendly’s Investor Index tracks sales of adult investment ISA policies and the total value of these new policies among Scottish Friendly’s UK-wide customer base, with quarterly activity measured against a base rate of 100.
It reveals the number of new adult investment ISA policies opened in Scotland in the final three months of 2020 decreased by -6% on the previous quarter. Only London and the North West saw bigger drops in the number of sales over the same period.
However, looking back to Q4 2019, the volume of sales in Scotland in the final three months of this year are up by +7%, compared to a UK average of +5%.
The latest Index figures show new investment into stocks and shares has levelled off across the UK following a rush of activity in the second quarter of 2020, when official data revealed that the UK household savings ratio had reached an all-time high of 29.1%.
The amount invested into new policies by UK investors in the final quarter is down -24% on the peak seen in the three months to June.
Since Scottish Friendly started tracking the Index data in Q1 2019, older investors have consistently been the most active.
However, while new policy sales and new policy value dropped among investors in the higher age brackets (35 to 49 and 50 to 64) in Q4, demand has increased among younger investors.
The number of stocks and share ISA policies opened by people aged 18 to 34 rose by +4% quarter on quarter while the value of new investments was up +9% on Q3.
However, latest figures show that amid a surge in retail investor activity, Scottish Friendly‘s January sales hit a new high last month, up by a third (+33%) year on year.
Kevin Brown, savings specialist at Scottish Friendly, said: “The past 12 months have been particularly volatile for the Index and in Scotland, people’s interaction with stocks and shares has clearly ebbed and flowed.
“In 2019, the Index was relatively stable, with minor fluctuations in new policy sales and value across the UK, but as the pandemic struck in Q1 2020 we saw a huge drop off in activity before a big spike in the three months to June.
“A period of levelling off then followed in the second half of the year and in the run up to Christmas, which traditionally impacts households’ capacity to save or invest.
“However, when comparing Scotland to the rest of the UK, demand has fallen away more sharply over the past six months. This suggests fewer households in Scotland are in a position to benefit from the restrictions on spending which have enabled some people to save or invest a little more.”