UK retail investors buy the dip in banks and ditch airlines and car makers

UK retail investors have been buying into the dip in bank stocks while brushing aside airlines and carmakers, the latest quarterly data from investment platform eToro suggests.

The list of most held stocks on eToro among UK investors continues to be dominated by technology companies, with Tesla, Amazon and Chinese electric vehicle maker Nio making up the top three.

Apple, Meta, and Microsoft are also further down the list, having seen their price improve significantly from last year’s sale.

Tesla’s share price is up 68 percent since the start of the year, while Apple’s shares are up 27 percent and Meta shares are up 76 percent. The trio is the best-performing stock in the entire S&P 500 in 2023.

But bank stocks have seen the biggest surge in demand, with the number of eToro investors holding Bank of America stock rising 35 percent, while Barclays holders are up 27 percent and HSBC saw 24 percent growth.

Exela Technologies, a US business process automation company, was the best climber, seeing a nearly 50 percent increase in holders at the end of the first quarter.

Man United reflected the club’s revival in football, coming in second with a 37 per cent gain in UK users.

Health-related and energy stocks — both defensive moves in the current climate — were also on the list, including Johnson & Johnson and Enphase energy, with users up 19 percent and 17 percent, respectively.

But travel industry stocks struggled, with the aircraft engine maker Rolls Royce the third most sold stock in the first quarter as the number of investors fell 11 percent.

However, according to the platform, the British company remains in the top 10 most-held stocks by British investors on eToro.

Airlines Lufthansa, owner of British Airways, IAG and budget carrier Ryanair also fell out of favor with investors, with holders falling 10 percent, 7 percent and 6 percent respectively.

IAG shares are up 14 percent since the start of the year and are up slightly from a year ago, but remain 65 percent lower than five years ago.

Budget airline EasyJet saw no major changes in holders and remains in the top 10 most held stocks by UK investors on eToro.

European groups Air France and aerospace company Airbus SE became less popular, while US cloud-based software giant Salesforce saw the biggest drop in holders – down 14 percent.

Ben Laidler, eToro’s global market strategist, said: “The banking industry has been in turmoil in recent weeks and stock prices have taken a beating, but ultimately we see the lasting impact confined to a few individual banks rather than the wider system.

With this in mind, buying the recent drop in bank stock prices could prove to be a good long-term game.

“The airline industry has made up some ground since being battered by Covid, but the recovery has been slow and inconsistent and some investors may decide their money can work harder for them elsewhere.”

Automakers may also lose traction as investors pay attention to broader consumer pressures taking place globally, with Porsche AG seeing a 12 percent drop in holders.

Supermarkets tesco And Sainsbury’s have also lost some appeal with UK investors, falling 9% and 6% respectively.

Laidler said this was ‘possibly a result of UK investors choosing to diversify more outside the UK’.