Hot Stocks: private investors pounce amid banking turmoil

The week's most actively bought investments

Source: Selftrade. *Data is as at market close last Wednesday.

The week's most actively sold investments

Source: Selftrade. *Data is as at market close last Wednesday.

Investors take banks in their stride

The big news this week has been the political furore surrounding Royal Bank of Scotland (RBS.L) CEO Stephen Hester’s bonus and the stripping of predecessor Fred Goodwin’s knighthood. 

These headline rows will quickly become tomorrow’s chip wrappings, but the uncertainty left behind is likely to affect British business generally and the UK banking sector more explicitly. And yet, in examining this week’s top traded shares according to broker Selftrade, it would seem that private investors have looked beyond the public row and adjusted their strategies.

The FTSE 100 has this week been dragged down by a market fearful of the implications of a domestic sector unable to attract top talent to its boardrooms. Imagine the implications of a Hester resignation and a frantic search for a replacement when serious candidates are reluctant to endure the sort of public vilification we've seen this week. It is this very scenario that concerned the markets, which duly sold off British banks.

Banks have been at the front of private investors' minds too, with the big three – Lloyds (LLOY.L), Barclays (BARC.L) and RBS – topping the most-sold list. And in that order, it should be added, since RBS (84% taxpayer owned and currently facing the music) was only the third most sold share. And although Lloyds tops the most-sold list, almost exactly the same number of shares were bought over the week. 

All three of the big banks made it into the top-bought list as well as the sell list, again conforming to the broader and consistent trend of private investors buying more than they sell. For those who favour banks in this very particular market, there will have been something of a buying opportunity.  

After all, although this episode says a certain amount about the current business environment in the UK, it will have much less impact on the longer-term prospects of these companies, which have little geographical constraint. These current travails are little more than a distraction from the real crisis rumbling on in the eurozone.

Private investors continue to look beyond the short-term headlines, and this banking row has been a real test of their ability to examine markets dispassionately.