British-focussed individual savings accounts (ISAs) are unlikely to provide a major boost to UK markets, CitiGroup analysts have warned.
Though the introduction of the savings accounts, unveiled by Chancellor Jeremy Hunt in last week’s Spring Budget, will aim to encourage investment in UK companies, Citi said the actual benefits could be limited.
“At best, we believe that this may have a £1.5 billion industry-wide net flow tailwind,” Citi said in a note.
Such accounts would offer investors an additional £5,000 tax-free allowance, above the £20,000 offered in other ISAs, and be exclusively focused on British-listed firms.
Given the FTSE 100’s near-£2 trillion market cap, such a boost could be very limited though, with Citi adding UK investment firms may themselves see little upside.
According to Hargreaves Lansdown, a British ISA could offer a £150 million net flow benefit.
This would likely fall to £90 million for AJ Bell - just 0.1% of its assets under management, as per Citi.
“We thus expect no material revenue benefit for the investment platforms, with investment required to adopt these changes,” the bank said in a note.
A ‘sell’ rating was reiterated for Hargreaves, while Citi also kept its ‘neutral’ rating on AJ Bell.