Surge in trading by small investors - 18.09.2009
Financial Times
Stock market trading by small investors has surged to levels last seen during the “dotcom” boom, with many thousands of people buying into the strong recovery in shares that on Friday sent the FTSE 100 to its highest this year.
Some of the country’s biggest brokers say a “tide” of individual investors – frustrated with the low interest rates on offer in cash savings accounts and wary of buying into property – have turned to equities in the hope of riding a six-month rally that has propelled the blue-chip index to levels almost 50 per cent above its March low.
Despite fears of an autumn correction, stock markets this week marked the anniversary of Lehman Brothers’ collapse by marching to fresh highs. The FTSE 100 finished with a 3.2 per cent gain for the week.
Analysis of industry data for the Financial Times shows the number of deals placed through execution-only stockbrokers rose to more than 4m in the three months to June, a number surpassed only in spring 2000.
Trading volumes by small investors could hit a record in the third quarter, said Compeer, which compiled the data. “Share trading has gone through the roof,” said James Brown, analyst at ComPeer, which looked at share deals, spread bets by investors, trading in contracts for difference and investment fund dealing. “Volumes are still on the way up.”
Share buying by retail investors had outweighed sales, he said. But the growth in trading volumes was mainly accounted for by a year-on-year tripling in the numbers of people becoming “active” traders – dealing more than 30 times in one quarter.
Angus Rigby, chief executive of TD Waterhouse, among the biggest retail stockbrokers, said his firm had seen a “tide of investors coming back to the markets” this year. Trading of bank shares had dominated.
Sue Concannon, managing director of Halifax Share Dealing, said more investors were looking to the market because of poor returns from savings and the weak property market. Many savings accounts were paying less than 1 per cent.
She said the brokerage was expecting to process 125 per cent more trades than last year.