TD Waterhouse Annual Review, 2006

Angus Rigby, Chief Executive Officer, TD Waterhouse, commented: “The two most popular stocks with retail investors over the year have been Vodafone and PartyGaming - both the subject of extensive market speculation and fluctuating prices. Elsewhere the focus has been on banking and energy stocks as investors looked to more defensive sectors. High street banks Lloyds TSB, Barclays and Royal Bank of Scotland all proved very popular, along with Aim listed Victoria Oil and Gas and energy giant BP. Speculative resources stocks including BHP Billiton and Vedanta also attracted interest, the latter recently being buoyed after announcing increased revenues and profits on the back of its improved pricing structure and increasing volumes.”

2006 trading volumes steady…

Like-for-like trading volumes increased slightly on 2005, although the first few months of the year saw a real surge in trade volumes driven by the highest levels of confidence in the market we have seen for several years. The average number of trades per day in Q1 2006 was up by around 50% on 2005 levels as investors returned to the market and active traders also increased their trading frequency.

May’s market correction dampened investor enthusiasm somewhat and trade volumes fell back to normal levels during the traditionally quiet summer period. But retail investors started to return to the market from mid-September and have continued to trade steadily through the final quarter of the year.

…as online trading booms

The popularity of online trading continues to increase: According to a study by Datamonitor earlier this year, more trades are now carried out online than any other means and at TD Waterhouse, online trading has increased by over 15% in the last 12 months – now accounting for around 75% of total trades. This growth can be explained by three factors - the increasing penetration and decreasing cost of broadband access, the steadily decreasing costs of online trading, and the ease of access to company information and research online.

Investor confidence at record highs

Looking ahead to the coming year, our own Investor Confidence research has found that a majority of investors believe that the UK stock market will continue to perform well in the coming period, with 71% of investors believing that the FTSE will increase over the coming year. This confidence in the market is further proved by the fact that almost eight in ten investors (79%) claim they will be buying or selling shares in the next 12 months and over half of them (57%) say they will do so in the next 3 months.

Almost half (49%) of investors believe that property is the sector most likely to perform well in the coming months, followed by the drugs and healthcare sector, (33%) retail & leisure (29%), financial services (28%) and IT (27%).

Top 10 Buys

1 PARTYGAMING
2 VODAFONE GROUP
3 BP
4 LLOYDS TSB GROUP
5 BHP BILLITON PLC
6 VICTORIA OIL & GAS
7 EMPYREAN ENERGY
8 ISOFT GROUP
9 BARCLAYS
10 VEDANTA RESOURCES

Top 10 Sells
1 VODAFONE GROUP
2 PARTYGAMING
3 LLOYDS TSB GROUP
4 VICTORIA OIL & GAS
5 BHP BILLITON PLC
6 BP
7 BT GROUP
8 EMPYREAN ENERGY
9 BARCLAYS
10 ARM HLDGS