Another US earnings season begins this week but interest from across the Atlantic has never been higher, as UK investors have significantly increased their backing of Wall Street stocks over the past year.
At the end of May in 2020, around 4.4% of retail investor assets were held in overseas-listed shares, only up slightly from the 4% a year earlier.
But as of May 2021, this had surged to 10.8% of total assets.
These figures are from AJ Bell, one of the UK’s three largest investment platforms, but numbers from its rivals echo this trend, with US tech giants mixing it with ‘meme stocks’ such as GameStop Corp (NYSE:GME) and AMC Entertainment Holdings Inc (NYSE:AMC) in the best-selling stocks list for the first half of the year.
At Hargreaves Lansdown, the largest of the three, new share purchases by clients of internationally listed shares topped 30% in the early months of 2021, up from around 10% at the end of 2019, as seen in the below chart.
Source: Hargreaves Lansdown
Interactive Investor also confirmed higher levels of international trading over the last year or so, a spokeswoman told Proactive, with new international trading records broken at various points earlier this year.
On commission-free trading platform Freetrade, the split in client assets is even more pronounced, with a spokesman saying around 45% is in overseas-listed securities, while June this year saw its largest ever proportion of US orders compared to UK at 73%.
Orders in July at Freetrade have been split 43% towards UK listed securities and 57% US-listed ones, compared to 49%- and 51% respectively in July last year.
The reasons for the rise among the big platforms are not certain but come amid a rise in interest in the stock market from younger investors and dramatic headlines about the meme stocks earlier this year.
“Broadly speaking, international stocks have been generating more interest from UK investors in recent years,” said Laith Khalaf, financial analyst at AJ Bell.
He said in “large part” this interest be put down to the stellar performance, and the familiarity, of some of the big US tech stocks.
“In the last year we’ve also seen the dramatic rise of Tesla shares and the meme investing craze which propelled a couple of US companies into the spotlight.
“Investors tend to focus on their home market when it comes to picking shares and this makes sense as many of the businesses will be well known to them, but until recently the UK had been a laggard amongst international markets and that may also be driving some investors to consider investing overseas.”
In the top 30 lists from the three investment platforms, electric carmaker Tesla Inc (NASDAQ:TSLA) and video games retailer GameStop were the most popular overseas-listed companies this year.
Also highly sought after were cinema operator AMC, China-based electric vehicle manufacturer NIO Inc (NYSE:NIO), Apple Inc (NASDAQ:AAPL) (NASDAQ:AAPL) and Amazon.com Inc (NASDAQ:AMZN).
US earnings season begins with numbers from PepsiCo Inc (NASDAQ:PEP), JPMorgan Chase & Co (NYSE:JPM) and Goldman Sachs (NYSE:GS) today.
At Freetrade, a spokesman attributed part of the swing to US stocks being that “UK markets have been relatively dull in comparison to the US over the last year or more”, and that more UK assets were held in exchange-traded funds, which were traded less often.
After a first-quarter US earnings season that was widely seen as exceptional, with roughly nine out of every 10 companies comfortably beating expectations, Richard Hunter, head of markets at Interactive Investor, said there is “more scope for disappointment rather than positive surprise” in the Q2 numbers.
“The technology sector will be an interesting test of this optimism. Despite some recent share price difficulties resulting from a switch out of growth and into value stocks based on inflationary fears, the Nasdaq has not only regained its ground but has also pushed to new record levels.”
After the banks get things going this week, IBM kicks things off for the tech industry next Monday, followed by others such as Netflix (NASDAQ:NFLX) on Tuesday, Intel NYSE:INTC), Snap (SNAP) and Twitter (TWTR) on Thursday, Tesla on Monday the 26 July, before trillion-dollar due Apple and Google parent Alphabet (GOOG) on the following day, and fellow trillion dollar club members Microsoft (MSFT) and Facebook (NASDAQ:FB) on Wednesday and Amazon on Thursday.
Top 30 best-selling shares on Interactive Investor so far in 2021 (international co's in bold)
- Argo Blockchain PLC
- Rolls Royce Holdings
- International Consolidated Airlines Group (IAG)
- Lloyds Banking Group
- BP
- Glaxosmithkline
- ITM Power
- Tesla Inc
- EasyJet
- Glencore PLC
- Vodafone Group
- Boohoo Group PLC
- Tui AG
- GameStop Corp
- Barclays PLC
- Avacta Group
- Cineworld Group
- Centamin PLC
- Unilever PLC
- Eurasia Mining
- Omega Diagnostics
- Greatland Gold
- AMC Entertainment Holdings
- Novacyt
- Legal & General Gp
- Tesco
- Apple Inc
- Ceres Power Hldgs
- NIO Inc
- Synairgen
Top 30 on AJ Bell
- Argo Blockchain
- Glaxosmithkline
- BP
- Lloyds
- Rolls Royce
- IAG
- Gamestop
- Unilever
- Tesla
- Aviva
- Royal Dutch Shell
- EasyJet
- AMC Entertainment
- Vodafone
- ITM Power
- L&G
- Avacta
- TUI
- Cineworld
- Tesco
- AstraZeneca
- Barclays
- National Grid
- Apple
- Carnival
- Boohoo
- Sylvania Platinum
- Greatland Gold
- Omega Diagnostics
- Rio Tinto
Top 30 on Hargreaves Lansdown (in alphabetical order)
- Amazon.com Inc
- AMC Entertainment Holdings Inc
- Apple Inc
- AstraZeneca plc
- Avacta Group PLC
- Aviva plc
- Barclays PLC
- Boohoo Group PLC
- BP PLC
- BT Group PLC
- Carnival plc
- Ceres Power Holdings
- Cineworld Group PLC
- easyJet plc
- GameStop Corp
- GlaxoSmithKline PLC
- Glencore PLC
- Greatland Gold PLC
- International Consolidated Airlines Group SA
- ITM Power PLC
- Legal & General Group PLC (LSE:LGEN)
- Lloyds Banking Group plc
- NIO Inc
- Novacyt
- Rolls Royce Holdings Plc
- Royal Dutch Shell
- Tesco PLC
- Tesla Inc
- Unilever PLC
- Vodafone Group PLC
Top 20 shares and indices on Freetrade
- GameStop
- AMC Entertainment
- Tesla
- S&P 500
- NIO
- Argo Blockchain
- Churchill Capital IV (merging with Lucid Motors)
- Apple
- Palantir
- FTSE 100
- Virgin Galactic
- Amazon
- Global Clean Energy
- BlackBerry
- FTSE All World
- NASDAQ 100
- Riot Blockchain
- Coinbase
- Clover Health
- BP
Before a UK investor can buy US-listed shares, they will need to complete an IRS W-8 form, which can be done online if you are a UK resident and your account is in your individual name. This saves UK investors up to 30% tax on US and Canadian income, and is valid for three years.