Tuesday, July 23

British funds are losing clients: the reasons for capital outflows

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British funds record capital outflows

The Association, which deals with investments in the UK, conducted an analysis of the market and sentiment among businessmen. The results were not very optimistic for the financial segment of the country as a whole. It turned out that British funds are losing confidence from retail investors. The latter are increasingly turning their attention to global organizations or asset management companies that are located in the Asian region.
Last month, investors withdrew about 1.38 billion pounds from local funds. This figure is considered to be the largest in the region, with the rate of capital outflow increasing even despite the good dynamics of economic recovery in the kingdom.
It should be noted that capital outflows are also noted in investment companies that are located in Europe, Japan and North America. As for Asia, there is an increase in investments in funds, the inflow amounted to 638 million pounds sterling.
The leaders in the demand among investors were fixed income instruments. Investments in this area increased by 1.4 billion pounds. At the same time, global funds lost more than 987 million pounds, one of the factors was the fall in bond prices.
Between 2016 and this year, investors withdrew more than 18 billion pounds from funds that operate in the UK market. They also invested about 20 billion pounds in global financial companies.

However, despite the capital outflow, local companies continue to increase their turnover. For example, the British fund CVC Capital Partners plans to buy shares of the Japanese corporation Toshiba. Experts note that this deal could become the largest purchase on the stock exchange in the past few years. While the parties are waiting for the consent of the Japanese government, as the company plays an important role in the energy sector in the country, including nuclear power.
Toshiba shares rose by 18%, and their value reached the highest value since 2016. The estimated amount of the deal could reach 14.5 billion pounds sterling, which is 30% higher than the corporation’s capitalization. After the purchase the Japanese manufacturer will become a private company.
As soon as it became known about the intentions of CVC Capital Partners to acquire Toshiba, the volatility of the latter’s shares increased sharply, resulting in a temporary trading freeze.
In 2017, Toshiba experienced serious difficulties, which could have led to a delisting on the Tokyo Stock Exchange. This was due to a number of scandals in which the company was implicated in falsifying data in financial reports. In addition, the company suffered a loss of 6.3 billion dollars, which was associated with failures in the U.S. nuclear energy market.


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