Bullish private investors pour £1bn into stocks after credit crunch

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The Independent Online

Private investors have ploughed almost £1bn into shares since the credit crisis struck this summer, according to a study published yesterday, as the stock markets suffered an attack of the jitters on the 20th anniversary of Black Monday.

Capita Registrars said the "aggressive" share buying had outweighed selling for the first time in a year, as retail investors poured £999m into equities in August and September. During the previous 10 months, investors had divested £7.4bn-worth of stock. John Roundhill, at Capita Registrars, said: "Private investors have positioned themselves for a stock market correction all year. And they were proved right." By the end of September, private investors owned £205.8bn-worth of shares, equivalent of 11.1 per cent of the market.

The FTSE 100 fell from 6,250.6 points at the start of August to 5,858.9 several weeks later, before rebounding to close September at 6,466.8. The FTSE 250 was unable to post a rise, citing a 2.6 per cent decline at the beginning of October.

Capita's Private Investor Watch came out on a day that the FTSE 100 slumped in the morning, causing traders to conjure comparisons with the stock market crash of 19 October 1987, nicknamed Black Monday, almost exactly 20 years ago.

The top tier gave up 114.5 points in the morning, driven lower by a poor performance by the Dow Jones index in the US on Friday. The total losses from the past two trading days in London have seen blue chips shed more than 200 points.

Traders fear that worse is to follow, although they do not predict a crash along the lines of 20 years ago, when the FTSE 100 fell 26 per cent over two days. One said: "There is a feeling that the weakness will continue for several sessions. The market is correcting an overbought position."

The Capita Registrars report found private investors piled into financial, mining and oil stocks from July as they looked to take advantage of underperformance in the sectors. While oil and mining groups have since soared, the rush to financials proved premature as the sector was hit by the crisis at Northern Rock.

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