UK equities: cash aplenty

Article Abstract:

Pension funds have sold UK equities worth 11.5 billion pounds sterling in the 18 months to Oct 1996. They have cut their equity weighting by 5% with cash taking up 3% of this and UK government securities (gilts) accounting for 2%. Returns from equities have been higher than from cash and gilts. The move into cash could be reversed unless there is a significant rise in interest rates. This reversal could take place after a share price drop brings opportunities, and the power of pension funds to buy shares will help limit weakness in share prices argues Legal and General's David Shaw.

Pension, health, and welfare funds, Pension Funds & Benefit Plans, Pension Funds

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Takeovers in 1995: City awash with cash

Article Abstract:

Takeover activity increased in the UK in 1995, rising to levels of the late 1980s. There have been relatively few new issues and few privatizations. Institutions have thus received cash from bid activity, but demands on cash have been low, boosting their liquidity by some 3%. Some of this cash will be reinvested in equities and this helps explain the rise in UK share prices in late 1995. Institutional investors have also purchased government securities (gilts) and the gilt market may benefit more than equities from the increase in liquidity.

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New hope for equities

Article Abstract:

Mergers and acquisitions have led to British institutional investors expecting large sums of cash, as have stock buybacks. Some of this cash could push up prices for equities if it is invested in equities. Fund managers may choose instead to rebuild cash balances or invest inoverseas bonds and equities, benefiting from a rise in the value of pound sterling. Pnesion funds may invest in areas where they have become underweight, such as banks, telecoms and pharmaceuticals.

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