Interactive Investor

Top 20 most-bought UK shares in Q2 2021

7th July 2021 13:19

Graeme Evans from interactive investor

Here are the UK-listed shares you were buying between April and June. There are a few newcomers this time, and some notable absentees.

Investors continue to show faith in the recovery potential of Lloyds Banking Group (LSE:LLOY) and GlaxoSmithKline (LSE:GSK) after they ranked among last quarter's most-bought UK shares.

BP (LSE:BP.) is also a popular pick for interactive investor clients, but the absence of BT Group (LSE:BT.A) in our top 20 suggests many think this year's 50% rally is as good it might get for now.

The so-called re-opening trade has focused on Rolls-Royce (LSE:RR.) and BA owner International Consolidated Airlines (LSE:IAG), while investors still see the income potential of Aviva (LSE:AV.) and Legal & General (LSE:LGEN).

For fast growth stocks outside the FTSE 350 index, last year's Novacyt (LSE:NCYT) and Avacta (LSE:AVCT) have been replaced by cryptocurrency mining platform Argo Blockchain (LSE:ARB) and clean fuel specialist ITM Power (LSE:ITM) as the second quarter's leading lights from AIM.

Other than these two, well-known blue-chip names dominate the list of stocks in demand as the FTSE 100 index has enjoyed a decent quarter on the back of the economic recovery.

Commodity prices have rallied as a result, but mining stocks now appear off limits for many investors following their strong run. Only Rio Tinto (LSE:RIO) and Centamin (LSE:CEY) make the lower reaches of the second quarter's top 20.

It's a different story for BP and Royal Dutch Shell (LSE:RDSB), whose shares are in the quarter's top four picks after Brent crude prices rallied to above $75 a barrel and worries eased over how the pair will adjust to a lower carbon environment.

Shell highlighted the recovery today when it reported strong trading and said it would lift shareholder distributions to as much as 20%-30% of cash flow from operations.

BP was the second most-bought stock on our platform and was only beaten to top spot by Lloyds Banking Group, as ii customers backed the lender to do well in a post-pandemic recovery.

Their support is echoed by UBS banking analyst Jason Napier after he noted UK banks are still trading at a big valuation gap to European peers, despite the removal of Brexit uncertainty.

Lloyds shares are taking their time to recover, however, as ongoing government support schemes have made it harder to determine stock market valuations. Shares are stuck at 46.5p but Napier said today he believes they should be at 54p.

His favourite UK pick is Barclays (LSE:BARC), which also ranked seventh on the list of most-bought UK stocks on the interactive investor platform in the second quarter. Barclays shares were today 171p compared with the UBS target of 210p.

Other banks on our list in 12th and 16th places respectively were HSBC Holdings (LSE:HSBA) and NatWest Group (LSE:NWG). Much will now depend on the sector's earnings season starting on 28 July, by which time UK regulators should have put banks back in charge of dividends and buybacks.

GlaxoSmithKline is one stock where clarity has improved for shareholders after under-pressure chief executive Emma Walmsley laid out her ambitions for the standalone drugs company.

She expects to deliver sales growth of more than 5% and an operating margin of over 30%, with objectives for the following five years no less demanding amid the prioritisation of R&D and commercial investment in vaccines and speciality medicines.

The Glaxo divi is one of the most prized in the FTSE 100 index, having been at 80p a share since 2014 for a current yield of 5.7%. It's being cut to about 55p next year, but as this still equates to a yield of 3.9%, there's good reason for the continued interest of ii investors.

Shares have crept up to 1,432.6p since Walmsley's strategy update last month, but analysts at Liberum reminded investors today they think the shares should be trading at 1,700p.

20 most-bought UK stocks on the ii platform in Q2 2021

Source: interactive investor

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