· The
UK Office of National Statistics today released data on institutional
investors' activity in financial markets during Q3 2005.
The table below gives an overview of this widely monitored
information, generally known as the "MQ5" data.
Today's report is the "First Release"; all the MQ5
figures are available, but the full, official release will come January
6, 2006. These data were
added several months ago to Haver's "UK" database, in the
Financial Data menu under "MQ5", listed at the bottom. These investors include insurance companies, pension funds,
investment trusts and unit trusts, four key capital market participants. As evident just in the summary table below, the amount of detail
offered is considerable, and also includes some balance sheet
information and figures on asset acquisitions and liquidations as well.
· One
aspect of the data for the first three quarters of 2005 is that these
investments so far this year look to be running below the pace of the
last several years. However,
we also see considerable movement among various asset categories and the
accompanying graph illustrates that there is considerable volatility
from quarter to quarter. So
it may be that Q4 would see a more sizable flow, as happened last year.
In the graph, it is seen that a four-quarter moving average of
this total has been fairly steady since late 2003.
· Another
facet of these data is the perhaps unexpected trend of net liquidation
of UK company shares. This
has occurred every single quarter beginning with Q2 of 2003, more than
two years ago. UK equity
prices continue to rise, though, indicating that other investors are
taking up the slack. Further,
these institutions continue as net purchasers of other UK company
securities and of foreign company securities.
These developments, rather than showing some disaffection with
British business, may instead serve as more evidence of the fluidity of
world capital markets and the ease and ability of investors to shift
their holdings.
· Finally,
over the last two quarters, the largest entry in our table is
"Other". This
includes, as noted in the footnote, loans, mortgages, land (plus
property and ground rents) and several other security types, some
denominated in foreign currency.
More concretely, these include overseas loans and mortgages,
direct investment interests and balances of overseas branches.
All of these items, as in the prior interpretation of flows among
various corporate securities, point to the increasing globalization of
capital markets. These
firms' portfolio and direct investments abroad are increasing, and
moreover, they are putting incremental funds in new and different
categories, both domestic and foreign, not simply government bonds, in
which their flows remain quite modest.