Buy British, They Said - But Try Finding One in the FTSE 100

ISA plan gets frosty reception

A couple of weeks ago, we explored the merits of a temporary or permanent reduction in the stamp duty (tax) paid on transactions in shares of newly listed UK companies, as a means of stimulating investment and trading in these entities.

Join IG, CMC, and Robinhood in London’s leading trading industry event!

This is just the latest in a long line of proposals designed to revolutionise retail investment in the UK, where the government is keen to encourage risk-averse retail investors to put more money into stocks and shares rather than cash ISAs - individual savings accounts that pay a set amount of interest - in order to stimulate its capital markets.

The latest wheeze for boosting equity markets is intriguing mainly because it has strong parallels with a plan that was announced by the previous administration and swiftly dropped by the new government.

It has been widely reported that the chief financial minister wants to introduce a minimum UK shareholding in ISAs.

[#highlighted-links#]

The obvious problem is how to define a ‘UK shareholding’. A casual observer might assume that the FTSE 100 is a list of the largest British companies, but they are of course just a group of multinationals that are listed in London.

Even for those multinationals that are based in the UK (Shell, for example), much of their investment is going into overseas markets rather than domestic projects. As one advisor points out, limiting exposure to only businesses that have zero presence outside the UK is not a recipe for strong returns.

It is possible that the UK government sees this as a tool – albeit a rather blunt one – for increasing the pool of domestic investment capital and boosting the status of London as an IPO location at a time when the battle for listing business has never been more ferocious.

However, the presence of so many multinational firms at the top end of the index is a reminder of the international profile of the UK’s capital markets, with an estimated three-quarters of index members’ earnings generated outside the UK.

Folk in the UK put £103bln into ISAs last year, £69.5bln of that (approx 2/3rds) went into cash ISAs...essentially, guaranteeing a near-zero, if not negative, real return on those funds over the next year...so much more financial education needed across the board...

— Michael Brown (@MrMBrown) September 19, 2025

Silver proves its mettle for investors

Gold may have hogged the headlines of late but there is a case to be made for focusing on another precious metal.

As I write this column, gold is trading at $3880 compared to an all-time high of $4381 in late October with a stronger dollar prompting many investors to sell. However, silver has rebounded following its own sharp selloff from record levels, which could be an indication that it is managing to consolidate at lower levels.

The MACD or moving average convergence divergence - a popular technical analysis indicator for precious metals - has also stabilised.

Establishing fair value is not a straightforward exercise. For example, while the cost of mining an ounce of gold is approximately 65 times that of the equivalent amount of silver, the current gold-to-silver ratio stands above 80:1.

One of the main attractions of silver is that it provides some of the same hedging benefits as gold while also having wider real world applicability in areas from manufacturing to pharmaceuticals, while supply-related volatility can further boost profitability.

Its conductive qualities makes it a core component of AI hardware ranging from semiconductor chips to sensors, improving efficiency and heat management across data centres and advanced computing infrastructure.

According to Otavio Costa, Macro Strategist at Crescat Capital, the gold-to-silver ratio has remained more than 2.6 standard deviations above its long-term mean for over five years for the first time since records began in the late 1600s.

He suggests a sharp correction in this ratio is highly likely, although any analysis of the data has to take the impact of the end of the gold standard in the 1970s into account.

Perhaps we shouldn’t be surprised in an era when established asset correlations are disintegrating and new connections are emerging on the back of seismic shifts in supply chains, trade relationships and technology.

Soaring deficits highlight unchecked spending. Geopolitical tensions brew, pushing gold, silver, and platinum as hedges. Balanced budgets? Unlikely without real policy shifts. ⚠️ pic.twitter.com/8Pnywm1ZH9

— Chris Tipper | 📈 ₿ 🟨 (@TipperAnalytics) November 3, 2025

Should we be concerned about US margin debt?

US margin debt (money borrowed by investors from brokers to buy stocks) continues to hit record highs. As of the end of September, this debt had crashed through the $1 trillion mark.

Such a high level of indebtedness is often viewed as a risk indicator because it can create a feedback loop. If the market declines, investors may be forced to sell their securities to repay their loans, which can accelerate the downturn. Analysts describe this as a ‘yellow flag’ rather than an immediate crisis, but it will hit home if prices start falling and investors have to sell to pay back what they have borrowed from their brokers.

It is estimated that the current level of margin debt is equivalent to approximately 2% of the overall value of the S&P 500, which might sound like a modest proportion until you consider that this moves it into a similar range to what we saw in during the dotcom boom as well as in 2007.

Risk is part of every trader’s life. But when so much trading is being done with other people’s money there is always a heightened possibility that small downturns can be amplified by panic selling.

Perspective is also important though. Strong market cap growth means that in real terms, leverage growth is rising in line with asset valuations.

Philip Petursson, Chief Investment Strategist at IG Wealth Management notes that margin debt has grown by near 40% year-on-year versus the S&P 500 at 18% and observes that if margin grows at the pace of the market, investors are merely holding to a fixed weight. In this instance, margin is increasing faster than the market.

One commentator suggested that while the stock market was on fire, the leverage behind it was equally flammable. Deutsche Bank analysts made a similar observation in July, warning that we were getting closer to the point where market euphoria becomes too hot to handle.

Given everything discussed above, traders will be keeping a close eye on Fed policy and liquidity conditions.