Tesla out, Nvidia in: Where investors are putting their money
Where the City’s movers and shakers have their say. Today, Victoria Scholar, head of investment at Interactive Investor, takes the Notebook pen to talk about the latest trends in retail investment
The stocks of the moment
At Interactive Investor (II), every month we publish a list of the most-bought equities, funds and trusts on the platform. As the UK’s second largest platform for private investors, this provides an up-to-date snapshot of where retail investors are leaning in the markets.
In May, US artificial intelligence (AI) stock market darling Nvidia took the top spot as the most bought stock, unsurprisingly after its triple digit percentage share price gain so far this year. Just last week it overtook Apple to become the world’s second largest company, surpassing the $3 trillion valuation. Shares are up by more than 600 per cent since November 2022 so it is no wonder investors keep piling in. However, the usually very popular electric vehicle giant Tesla dropped off the most bought list last month, with its appeal among investors fading on the back of a near 30 per cent slide in its share price in 2024.
In the UK, some beaten up stocks found buyers with opportunistic investors jumping at the chance to snap up shares on sale. Easyjet scored a position on the top 10 leaderboard on the II platform in May – it was the worst performing stock on the FTSE 100 last month, plunging over 14 per cent partly because its CEO Johan Lundgren announced plans to step down. Meanwhile Ocado looks set to drop out of the FTSE 100 after six years, but that didn’t stop II investors from buying up shares in May.
In terms of asset classes, commodities saw the biggest jump in demand with a 184 per cent surge in net inflows among II customers year-on-year. Heightened geopolitical tensions and cautious outlooks from central banks have supported the price of precious metals in particular this year. Meanwhile net inflows into fixed income almost doubled year-on-year fuelled by the higher interest rate environment that has sharply increased demand for bonds.
On the funds side, Royal London Short Term Money Market was a very popular fund among II investors who are looking to pocket its distribution yield of 5.2 per cent within a low-risk area of the bond market. L&G Global Technology Index also saw strong demand; it offers plenty of exposure to the US technology giants that have benefitted from the AI hype.
Are rate cuts on the way?
According to a survey by KPMG and the Recruitment and Employment Confederation (REC), there has been a sharp rise in the number of job seekers in the UK, driven by higher redundancies and fewer job openings.
The number of people looking for work has risen at the fastest pace since December 2020 with ‘staff availability’ up for the fifteenth straight month. Recruiters suggest that higher interest rates are to blame for the employment market’s slowdown. Although this may be bad news for many workers, it could be good news for mortgage holders, paving the way for the Bank of England to cut interest rates sooner rather than later.
Taking off
The International Air Transport Association (IATA) expects record passenger numbers this year. According to data compiled by BloombergNEF, 10.5m flights are scheduled for the third quarter of this year with planes expected to be as full as they were before the pandemic. Accompanying this is a major comeback in demand for fuel – the IATA expects fuel consumption by the global airline industry to hit 99bn gallons this year, rising three per cent from 2019 levels.
Tokyo drift
Japan’s economy contracted less than previously estimated in the first three months of the year. Q1 GDP fell by 1.8 per cent, revised higher from the preliminary estimate for minus two per cent supported by upgrades to capital expenditure. Investors are looking for hints as to when the central bank might hike again after it raised interest rates in March for the first time in 17 years. The Bank of Japan could also discuss cutting its Japanese government bond purchases this week as it looks to reduce its monetary stimulus partly to help stem the slide in the Japanese yen.
Quote of the week
We think that this time a Labour win will likely be seen as a positive for the UK markets
JP Morgan research report
What I’ve been listening to
Interactive Investor’s On The Money Podcast
The general election manifestos are imminent, but, even prior to the respective policies being announced, the key personal finance battlegrounds have already been drawn. It was both informative and thought-provoking to hear how the landscape may change for tax, pensions, ISAs and the stock market on the latest On The Money podcast, hosted by Kyle Caldwell.
Another recent episode I took a lot away from was hearing from a fund manager who has his boots on the ground in India. Kyle spoke to investment trust manager Gaurav Narain of India Capital Growth Fund about India’s election, the reasons why India’s stock market has performed strongly over the past couple of years and whether valuations have become too pricey for investors that are now considering India.