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Home/Equity investment in Scotland drops in Q4 2020

Equity investment in Scotland drops in Q4 2020

The number of new adult investment ISA policies in Scotland during the final quarter of 2020 dropped 6% on the previous quarter

According to Scottish Friendly, the value of new stocks and shares ISA policies opened by savers in Scotland in the last quarter of 2020 dropped by 14% on the previous quarter.

The value of new adult ISA investments made by Scottish customers in the fourth quarter of 2020 also fell 26% year-on-year.

By comparison, the value of all new policies from UK customers remained flat between the third and fourth quarters, while year-on-year total UK policy sales dropped by just 10% in the final three months of 2020.

Scottish Friendly’s Investor Index tracks sales of adult investment ISA policies and the total value of these new policies among its customer base, and measures quarterly activity against a base rate of 100.

It reveals the number of new adult investment ISA policies opened in Scotland in the fourth quarter of 2020 was down 6% on the previous quarter.

Only London and the North West saw bigger drops in the number of sales over the same period.

The latest Index figures show new investment into stocks and shares has levelled off across the UK, due to 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 record of 29.1%.

The amount invested into new policies by UK investors in the final quarter fell 24% on the peak seen in the three months to June.

Since Scottish Friendly started tracking the Index data in the first quarter of 2019, older investors have consistently been the most active.

However, while new policy sales and new policy value dropped among investors in the 35 to 49 and 50 to 64 age brackets in the fourth quarter, 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 the third quarter.

Kevin Brown, communications manager 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.

As the pandemic struck 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, he explained.

He said, 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.