Everyday Australians have used the Covid-19 pandemic to try their hand at the stock market, with trading platform Nabtrade recording a whopping 500 per cent uptake in new applicants in March.
And the upswing in activity continued: “We saw another 300 per cent increase in April...And we saw that continue through May,” Gemma Dale, director of SMSF and Investment Behaviour at Nabtrade told a webinar hosted by ETF Securities.
Nationally, retail trading increased to $3.3 billion during the pandemic - up from $1.6 billion pre-Covid-19.
The increase in activity attracted attention from Australia’s corporate regulator, the Australian Securities and Investments Commission, which warned Aussies against trying to time the market.
“ASIC analysis of markets during the COVID-19 period has revealed a substantial increase in retail activity across the securities market, as well as greater exposure to risk,” the regulator stated.
“[It is] likely to lead to heavy losses – losses that could not happen at a worse time for many families.”
But some punters weren’t swinging bats and hoping they’d hit something - in fact, they were focused on quality stocks, rather than speculative purchases, Dale said.
Here’s what they were buying:
Retail investors were purchasing blue chip stocks that they were already familiar with, Dale said.
“We saw people buying stuff they wanted to own for a long time before, but thought they were too expensive,” she said.
For example, CSL was a big hit among retail investors, she noted.
While banks were having a little bit of a tough time, retail investors still took the plunge.
“Most of them saw that times are going to be tough for banks,” Dale said.
“When you give everyone a loan repayment holiday for six months and when you have high levels of unemployment, and so on, it's going to be tough, but these are still high-quality businesses. They're going to be around after all of this is ending.”
While Qantas may have hit dire straits as the pandemic forced travel to come to an abrupt halt, investors flocked to purchase travel stocks, Dale said.
She suggested the surge was due to expectations that Australia would still need a national carrier, and people would once again travel when borders reopen.
Buy now, pay later
Retail investors were also “aggressively” buying Afterpay, Zip and Splitit.
“The buy now, pay later space has been really, really active,” Dale said.
“These have been really big anyway - Afterpay is very much loved among our base, it’s been in the top 10 for a few years now, and most of our investors have done really well out of that,” she said.
Dale said ETFs were also a popular, quick entry point for many investors.
“What we saw in these really, really volatile days, was a lot of our investors wanted to get a piece of the action,” she said.
“They move extremely quickly. If they didn't feel they had time to do the research, or they didn't want to take a position on what was going to move, they just wanted to be in it… We saw a lot of active investing using ETFs to get access to particular positions that they might otherwise have found quite difficult, or just from a timing perspective.”
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