Keeping it local: Welsh DIY investors up to three times more likely to invest in a company based in their home city 

New research by social trading and investing platform eToro reveals that Welsh investors are up to three times more likely to invest in a firm with a major presence in their home city; a trend that occurs across all of Wales’ major cities. 

Admiral Group, the Cardiff-based insurer, is over indexed by 316% for Cardiff-based investors. Swansea-based investors are also significantly over-indexed in Admiral Group (by 398%), and in HSBC (by 55%) both of which have major presences in the city with HSBC Direct employing about 1,000 people in the local area.

In Newport, local investors are also over-indexed in Admiral (382%) as the city used to be home to a major Admiral office. Meanwhile, Wrexham-based investors are far more willing to back pub chain Marston’s (168% over-indexed) and Airbus (350%), both of which have a large local presence with Marston’s running 12 pubs in Wrexham.

When investors in a region are ‘over-indexed’ on a stock, it means a greater proportion of the local population invest in a company compared with the rest of the country. 

For example, just 0.4% of UK eToro investors hold shares in Admiral Group, the Cardiff-based insurer. However this jumps to 1.5% for Cardiff-based investors, meaning they are three times ‘over-indexed’.

Dan Moczulski, UK Managing Director at eToro, commented: “One of the basic tenets of good investing is to back what you know and understand – and it’s clear that welsh investors follow that advice when it comes to constructing their own portfolios.

“Whether it’s Cardiff-based investors snapping up Admiral Group stock or Wrexham users loading up on Marston’s shares, people are much more likely to invest in the businesses that are famous in their own region or city. 

“We have seen a ‘buy local’ trend in wider society develop in recent years, where consumers seek out local produce over goods produced far away from where they live. A similar trend is clearly emerging when it comes to investing.

“Buying stock in a certain company has become a more social, community-driven activity. Not only do investors want their investment to make money, they also want it to reflect their own personalities and communities, hence why we are seeing this correlation.”

Source: eToro platform data March 2023.