Foreign investors pile in to FTSE stocks A glut of international mergers and acquisitions and the relaxation of ownership rules meant 53.2pc of Britain's £1.8 trillion stock market was owned by international investors, the Office for National Statistics (ONS) said on Wednesday, up from 43.4pc in 2010. By comparison, less than 20pc of the UK stock market was owned by foreign investors two decades ago. Ian Williams, a strategist at Peel Hunt, attributed the shift to the changing composition of the FTSE 100, which accounts for 85pc of the total value of the stock market. "The companies that dominate the UK market are London-listed but certainly not London-based," he said. The resource sector would be the obvious example. We havent got as many miners in the index as we did six months ago, but that's certainly distorted the top end of the market. Henry Tapper, director of First Actuarial, said tough regulations had forced managers of defined benefit pension schemes - which manage civil servant pensions - to "immunise" the risk of equity volatility "at any cost," and that this had driven the flight to safer investments, such as bonds. More recent data has shown that unlike their US counterparts, UK pension fund managers have been reluctant to follow the "Great Rotation" - where investors move out of bonds and into equities. Mr Williams said that while he did not expect a flood back into UK stocks, portfolios were unlikely to decrease much further. It's an unusual situation because asset prices have been artifically manipulated by the US Federal Reserve, so until this extraordinary position unwinds over the next three to four years, it's difficult to judge what the outcome will be. Analysts were also reluctant to say that the so-called "cult of equity" was dead. The term dates back to 1956 when George Ross Goobey made a speech promoting stocks as a way of generating growth. "I think that the cult of the equity is alive and well, but it's living in another area of pensions," said Mr Tapper. Whereas a defined benefit scheme is hamstrung by the need to cover liabilies, defined contribution schemes have no such restrictions, and they are almost entirely in equities. Mr Tapper said he expected a "great pension rotation" over the next twenty years, when auto-enrolment rules and the phasing-out of defined benefit schemes increase the appetite for equities. Wednesday's data also showed that equity holdings by individual UK investors rose to 10.7pc from a record low of 10.2pc two years earlier. The public sector owned 2.5pc of the UK stock market - worth £44.1bn. This largely reflected government bailouts of the Royal Bank of Scotland and Lloyds Banking Group in 2008, the ONS said.