An analysis of stock in UK-domiciled firms found they were worth a total of £1.7 trillion in 2014, the latest year for which statistics are available.
According to the Office for National Statistics (ONS), foreign investors increased their share of these firms from 43.4 per cent in 2010 to 53.6 per cent in 2012 and 53.8 per cent by 2014.
This meant foreign ownership jumped has jumped £167.7bn over the past five years – from £760.9bn to £928.6bn.
The Telegraph reports that the total for foreign ownership includes both individual and institutional investors.
According to the ONS report, the large increases seen since 1994 “reflect the increasing internationalisation of the London stock market and the increasing ease with which overseas residents can invest in UK-quoted shares, for example through electronic trading”.
It added: “As a result, a substantial part of the ownership of rest of the world investors represents international investors owning international companies.”
Looking at a geographical breakdown, North America was by far the biggest owner, with 46 per cent of all foreign ownership.
European investors owned 26 per cent, while those living in Asia held 16 per cent of quoted UK shares.
Among the other key findings in the study, there was a notable rise in the holdings by individual investors based in the UK.
In 2012, this stood at £162bn, or 10.1 per cent, but two years later it had jumped to £206.2bn, or 11.9 per cent.
Such an increase could be the result of more UK savers turning to shares as they tire of poor interest rates on savings accounts.
A spokesperson at finance site Moneyfacts said: “Savers have slowly watched savings rates on their accounts plummet to all-time lows.
“It seems savers are paying a high price for the low base rate, meaning they have missed out on significant interest payments.
“This prolonged misery has caused once cautious savers to opt for more risky options to seek a return where they can.
“However, savers opting for a more risky option such as shares would be wise to keep an element of their investment within the relative safety of a savings account.”
The website noted that the average one-year fixed rate bond had fallen from 2.64 per cent in 2012 to 1.47 per cent today.