Global investors have sold British stocks at the fastest pace in two decades amid mounting anxiety over Chancellor Rachel Reeves’s forthcoming Budget.
Figures released on Tuesday by Bank of America (BoA) show that money managers cut UK equity holdings in early September at the steepest rate since April 2004.
The survey of 165 chief investment officers and senior asset allocators worldwide found that investors executed a major “rotation” out of UK shares into other markets.
On average, global fund managers were -20pc underweight UK equities in September, compared with -2pc the previous month. Allocations to British stocks dropped to their lowest level since March this year.
“This is incredibly serious. Investors are selling out of Britain at the same time as wealth creators are leaving. Under Rachel Reeves, the tide is going out and leaving the economy parched of investment and skills.”
Hugh Sergeant, a fund manager at River Global Investors, told The Telegraph: “Investors are currently terrified of this Government, and particularly the next Budget.”
The Chancellor is expected to announce tax rises on 26 November in a bid to stabilise public finances, little more than a year after imposing £40bn of increases.
Andrew Griffith, the shadow business secretary, said: “This is incredibly serious. Investors are selling out of Britain at the same time as wealth creators are leaving.
“Under Rachel Reeves, the tide is going out and leaving the economy parched of investment and skills. Our formidable strengths remain, but they can’t outrun the headwinds from Labour’s policies.”
The sell-off included utilities and energy companies, as well as shares tied to the EU and emerging markets, according to the BoA Global Fund Manager Survey. By contrast, investors increased positions in healthcare, telecoms and consumer discretionary firms such as carmakers and luxury retailers.
The exodus comes despite a 13pc rise in the FTSE 100 this year, outpacing the S&P 500 in the US, which has gained 12pc, and France’s CAC 40, up 7pc. However, it lags behind Germany’s DAX, which has climbed 19pc on the back of rising defence spending, and the Nasdaq, up 15pc amid investor enthusiasm for artificial intelligence.
BoA said its September survey was its most “bullish” since February, reflecting a “big jump in global growth optimism” as recession fears receded following Donald Trump’s tariff measures earlier this year.
The most popular investment theme remains the “Magnificent Seven” technology giants: Apple, Microsoft, Amazon, Alphabet, Meta Platforms, Nvidia and Tesla, with 42pc of managers betting on further gains.
Read more at The Telegraph here.
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