The UK stockmarket excluding Scottish-based stocks would have returned almost twice as much as a hypothetical ‘Scotsie 100’ index in the past 60 years, research has shown.
Paul Marsh of the London Business School and Scott Evans of Walbrook Economics compared how much £1 invested in the Scotsie 100 would have returned compared with a ‘Rest of the UK’ index.
They found £1 invested in the Scottish index for 60 years with dividends reinvested would be £648 today. With the other index, the sum is £1,168.
The research showed the biggest impact on the Scottish index had been the “near-collapse of Royal Bank of Scotland (RBS) and Halifax Bank of Scotland (HBOS)”.
“When financial stocks (or even just RBS and HBOS) are excluded from the Scotsie 100 index, Scottish stocks outperformed the rest of the UK in the past 60 years by a small margin,” the researchers said.
Mr Marsh and Mr Evans compared Scotland to other countries with similarly dominant banking sectors, such as Iceland, Cyprus, Greece and Ireland, and said there were benefits to being part of the UK when the crisis hit. “The burden was spread across the UK rather than falling entirely on Scotland. The citizens of those other countries enjoyed no such co-insurance and suffered accordingly,” they said.
The paper also looked at investment trusts, which it said were “not only invented in Scotland, but are an important component of the Scotsie 100”.
“While it is sometimes argued that ‘distance from the noise of London’ gives Scottish trusts an edge, the paper finds no support for this, with Scottish trusts slightly underperforming,” the pair said.
The largest Scottish stocks on the London Stock Exchange are SSE, Standard Life, RBS, Weir Group and Aggreko.
Mr Evans said investors should not be unduly concerned, as companies and individuals can re-domicile if necessary. He added: “There would also be a period of at least 18 months during which the terms of separation are negotiated. They can afford to wait and see.”
