Retail share investors in tiny minority
October 18, 2005 http://www.smh.com.au/news/Business/...401251072.html
More Australians might be trading shares, but new research shows retail investors still own only a fraction of most major listed companies.
And the shareholdings of so-called "mum and dad" investors are heavily skewed towards the telecommunications sector and Telstra in particular.
A study released by the Australasian Investor Relations Association (AIRA) found retail investors still hold a very low percentage of stock.
Coming as the annual general meeting season (AGM) shifts into gear, AIRA chief executive Ian Matheson said the findings had big implications for investor relations.
Using data from the annual reports of 198 companies listed on the ASX300 index between 2001 and 2004, the group found that investors holding 1,000 shares or less made up 31 per cent of shareholders, but owned just three per cent of the top 300 companies.
Yet 68.5 per cent of the market was owned by institutional investors, or those with 100,000 shares or more, who made up just 1.5 per cent of all shareholders.
"While there is a large number of retail holders, the percentage of stock held by these investors is very small," the report said.
Study co-author Dr Carole Comerton-Forde, of the University of Sydney's School of Business, said retail investors - defined in the report as those owning less than 10,000 shares - accounted for roughly 85 per cent of shareholders in the top 300 companies.
However, they owned less than 20 per cent of shares on issue.
"So (there's) a very large number of shareholders ... owning only quite a small fraction of the shares on issue," Dr Comerton-Forde said.
She said the number of retail investors was also disproportionately high in the telecommunications sector, with more than 70 per cent of shareholders holding less than 1,000 shares.
"A disproportionate number of retail shareholders own stock in the telecommunications industry," she said.
"This is driven by shareholdings in Telstra."
Mr Matheson, whose organisation represents 74 publicly-listed companies, said the findings would be valuable to companies which faced a growing tension between the demands of retail and institutional investors.
"Companies are looking to benchmark their ownership base against their peers and other companies," he said.
"What this is suggesting, and I think many companies have known (this) for a long time, is that the shareholders present at the meeting (the AGM) typically represent a very small percentage of the shares on issue of their company."
He said the results had big implications for how companies handled different segments of their shareholder base on an ongoing basis.