Report shows 435,000 Australians joined the stock market for the first time in 2020
Dr Angel Zhong from RMIT University is available to talk about the large number of first-time traders in Australia and implications on the Australian stock market.
Dr Angel Zhong (0433 810 413 or angel.zhong@rmit.edu.au)
Topics: retail investors, trading platforms, Robinhood, ASX
"A new report from Investment Trends shows that 435,000 Australians started to trade in the Australian share market for the first time during the last 12 months.
“This is driven by a number of factors, including low interest rates, dramatic volatility in the share markets around the world, government stimulus, and the emerging low-cost trading platforms.
“Low interest rates make stock investment more attractive.
“Dramatic volatility and the low share prices in the first half of 2020 attracted many young investors. Retail investors are shown by finance research to prefer low-priced stocks.
“The fear-of-missing-out and get-rich-quick are general behavioural biases observed in retail investors.
“Low-cost trading platforms further fuelled and lured young and novice investors’ entrance to the share market for the very first time.
“The prevalence of social media drives social trading, which concerns ASIC. People are giving unmoderated investment advice on social media such as YouTube, Facebook, TikTok and Reddit.
“RMIT research shows around the world, countries with government stimulus payments are associated with larger increase in retail trading volume. It appears that government subsidies were spent on share market investing.
“The RMIT data shows countries with larger gambling revenue prior to COVID-19 were associated with a greater increase in retail trading last year, since investors see the stock market as a substitute for gambling.
“The rapid increase in share market participation highlights the importance of incorporating and enhancing financial literacy in education.
“Investors who are not financial literate are vulnerable to social trading and could incur losses in the share market.”
Dr Angel Zhong is a Senior Lecturer in Finance in the School of Economics, Finance and Marketing at RMIT University. Her research focuses on investment and investor behaviour in share markets.
For interviews, contact Dr Angel Zhong on the details above. For other media enquiries, contact RMIT Communications: 0439 704 077 or news@rmit.edu.au
Acknowledgement of Country
RMIT University acknowledges the people of the Woi wurrung and Boon wurrung language groups of the eastern Kulin Nation on whose unceded lands we conduct the business of the University. RMIT University respectfully acknowledges their Ancestors and Elders, past and present. RMIT also acknowledges the Traditional Custodians and their Ancestors of the lands and waters across Australia where we conduct our business - Artwork 'Sentient' by Hollie Johnson, Gunaikurnai and Monero Ngarigo.