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Welcome to Ringing of the Bell, brought to you by the ASX and Bell Direct I’m Jessica Amir market analyst with Bell Direct.

Joining us today is Head of Relationship Management – Trading Services, Rob Nash, Rob, thanks so much for having us here at the ASX

Rob: Thanks Jess, good to be with you

Jess: So today we’re talking about some of the trends that we’ve seen in equity trading this year, and we’re also going to talk about the aftermath of the U.S. election and what investors could expect.

But first up, in a recent video that we did with Andrew Campion, we dissected some of the trends brought about from the ASX Investor Study, but further to that I wanted to ask you what changes in investor behaviour have you seen that stand out to you?

Rob: Yeah thanks Jess, that investor survey did bring some interesting insights but particularly the intentions for retail investors to increase their trading activity over the coming 12 months, and we’ve certainly seen that it would be fair to say the average daily turnover of all the buys and sells for the months leading up to february and march of this year was around 7 billion Australian dollars per day and what we saw through COVID-19 was from the peak of the market of February 20 of this year, all the way down to the bottom of the market on the 23rd of March, the market fell 36%, and as we now know was the fastest bear market in history.

So that type of volatility that we’ve seen typically attracts a big shift in volume and trading, and retail investors certainly went along for that ride.

We saw retail activity participation go from about 10% of daily trades, to around 18% – that’s a massive increase for the retail investor base.

So what we saw then throughout that period was the average daily turnover overall increased to about $12 to $13 billion per day, so that’s a massive increase and retail went along for the ride.

The level of retail trading activity at the moment is currently sitting at close to a record high, it would be fair to say however that in the last few months trading levels have receded to perhaps a bit more long-term levels, but I’m pleased to let you know that the level of retail has still maintained a very high level.

Jess: Indeed it is really pleasing to see investors are taking more control of their finances and getting involved, or more involved with investing but I wanted to talk about the key themes that we’ve seen this year one of those is that investors have been favoring the high growth tech sector, and the stocks in that sector, but what are you seeing?

Rob: Yeah that’s spot on Jess.

We’ve also seen the tech stocks around the buy now-pay-later segment of the market seeing some significant retail activity.

Quite well known names probably from your investors, there are stocks like Afterpay (ASX:APT), Zip (ASX:Z1P), Splitit (ASX:SPT) and Sezzle (ASX:SZL).

Considering the global dynamics in tech, they’ve certainly matched that performance.

If you go back to the beginning of COVID-19, when around that February/March period, probably two interesting trends to highlight which I think are still significant for us today, was that one of the first sectors that was impacted, were some of the travel stocks considering that how quickly lockdowns were activated across the country, and in fact the world.

So stocks like Qantas (ASX: QAN), Flight Center (ASX:FLT), and Webjet (ASX:WEB) saw some significant number of trading from from retail investors, and the other thing worth mentioning if you recall, the supermarkets at the time we were draining the the shelves of hand sanitizer and toilet paper, retail activity in the stocks like Coles (ASX:COL) and Woolworths (ASX:WOW) were incredibly strong, and they participated in in chasing defensive names like that in a period where the market was quite volatile.

Some of the other things just mentioned as well throughout the course of this year in the resources space we saw some significant price rises in iron ore and gold and that’s been reflected again by strong retail activity in Miniral Resources Limited (ASX:MIN), Fortescue Metals Group (ASX:FMG), and also in the gold space stocks like Newcrest (ASX:NCM), Saracen (ASX:SAR), Evolution Mining (ASX:EVN), and Northern Star Resources (ASX:NST).

Jess: Another key theme is also the the rise of ETFs with retailers taking part in that as well

Rob: Yeah again correct Jessica, the retail activity that we’ve seen this year has translated very easily amongst exchange traded funds, in particular some of those ETFs that are listed on the ASX that allow investors to profit in both a rise and a falling market.

Some of those ETFs are issued by Betashares that give exposure to both Australia and global indices. As well, we also have seen some pretty traditional and safe haven activity in ETFs, about the in VAS, IOZ, and STW from the bigger traditional ETF issuers, and Blackrock, State street and Vanguard.

Overall though, pleasing to say that retail activity now counts for almost 20% of all exchange traded fund turnover, and that’s been relatively consistent throughout the years, that’s really pleasing to see.

Jess: And moving to the U.S. election now, we know each and every year after a U.S. election, the Aussie share market has rallied six and a half to 40% that’s just looking at the past 36 years, and we also know the Aussie share market performance is generally tied to the U.S. share market and returns in the U.S. are typically higher under a Democratic presidency, but what should investors be watching now locally?

Rob: Yes most investors really dislike uncertainty, so I think once the political dust settles down they’ll be reverting back to quite traditional methods of looking at what securities and stocks to invest in.

There are many Australian stocks listed here that have very good earnings generated from the U.S. economy, for example some of the building material stocks; James Hardie (ASX:JHX) and Boral (ASX:BLD).

Gaming stocks like Aristocrat (ASX:ALL), healthcare stocks like Resmed (ASX:RMD) and CSL (ASX:CSL).

There are many others out there – people should be focusing on some of those blue chip stocks that have strong stable and growing earnings that generated from the U.S. economy.

Two things we should never forget though; we’ve currently got synchronized global central bank stimulus being injected into economies around the world, and last but not least, we have COVID-19 still to deal with and all of us are expecting that sometime during 2021, both the government and scientific community will be rolling out some sort of treatment for that, and that will certainly reset the investment markets.

Jess: absolutely we’re all crossing our fingers and toes for that, particularly given six of the large U.S. biotechs are really ramping up mass scale production to develop a vaccine, so fingers crossed 2021 mid next year we’ll have something. Rob Nash, thank you so much for your time and for your insights.

Rob: Thanks Jess good to be here.