SINGAPORE – It is a data point that has OCBC Bank’s attention – young investors picked Tesla as the top choice for their first trade in 2024, a marked shift from the local bank stocks that 25- to 35-year-olds chose in 2023 and 2022, and Singapore Airlines in 2021.

Singapore’s second-largest bank noted that as more investors look overseas for stock offerings, there will be more effort to bring the global market to local investors.

One way to do this is through exchange-traded funds (ETFs).

OCBC’s latest ETF features an international component and is part of the group’s efforts to appeal to local investors who have a global outlook, especially young ones.

It said on April 11 that its brokerage arm OCBC Securities has teamed up with Lion Global Investors – which is also a member of the OCBC group – to introduce the world’s first ETF that tracks the performance of Asia-Pacific (Apac) financial services companies. This is OCBC Securities’ fourth ETF launch in less than four years.

Called the Lion-OCBC Securities Apac Financials Dividend Plus ETF, the fund will be listed on the Singapore Exchange on May 13. The initial offer period starts on April 11 and ends on May 3.

OCBC said the ETF will appeal to investors looking for consistent dividend yields.

“Apac banks have consistently paid high dividends amounting to at least US$130 billion (S$176 billion) in the last two years and have dominated other regions,” it said. It noted that investors in this ETF will receive a minimum dividend payout of 5 per cent per annum of the issue price for the first two years distributed on a quarterly basis.

OCBC Securities managing director Wilson He said: “We expect this ETF to be well received because of its unique proposition – stable dividends, combined with the good growth prospects that stem from its Apac focus.

“Moreover, ETFs have long been popular among our customers at OCBC Securities. Income-focused investors will find this ETF particularly attractive.”

In an exclusive interview with The Straits Times, Mr He pulled up data that showed how young investors are gravitating towards overseas technology stocks as their first trade, taken from the first quarter of 2024.

“There’s a shift from Singapore blue chips to tech stocks in 2023,” he said, adding that “2024 also saw the rising interest in artificial intelligence (AI), and we see Nvidia being one of the top traded stocks for young investors”.

He noted that the volume of trading transactions for Nvidia went up 10 times in the first quarter of 2024, compared with the same period in 2023. The volume of transactions for the so-called Magnificent Seven stocks – Apple, Microsoft, Nvidia, Amazon, Alphabet, Meta Platforms and Tesla – also went up three times year on year in the first quarter of 2024.

“I think it is social media-driven and through word of mouth online,” Mr He said. He added that the OCBC financial wellness index showed that 20 per cent of investors in their 20s rely only on social media and chat groups to make investment decisions.

“The young investors like to do their own research. Typically, they don’t really talk to sales agents, so for OCBC it’s about how we can develop a more personalised trading experience for them,” he said.

This is where AI comes in to bring information to investors in a way that is customised to their needs, while relying on analyst research, so they can make better decisions. The virtual assistant known as Oscar was rolled out in November 2023 on the iOCBC app, and it trawls market data to give personalised trading ideas based on an investor’s profile on a weekly basis. It also provides research snapshots of stocks.

Oscar currently tracks stocks in the Singapore market, but will be deployed to track the Hong Kong and American markets by the end of April.

Mr He said the market dynamic is also changing, which makes things challenging, especially for passive traders who do not actively rebalance their portfolios and watch the markets.

“A couple of years back, I think the buy-and-hold strategy was still quite a good one. But over the years, I have seen a lot of algorithms come into play in the market, not in Singapore but in the United States. The Singapore market, though, is also quite influenced by the US market. So we see the market trend towards short-term volatility,” he said.

This favours active traders, he added, which means that passive traders need to have a good portfolio with solid companies and strong dividends.

Mr He said OCBC Securities wants to bring the global market here for investors, because other markets are growing in capitalisation. “We have the ambition that one day a passive investor can come to OCBC and mix and match their asset allocations and cover the world,” he said.

Investors can also look into other thematic funds like sustainability portfolios. As part of its series of ETFs, OCBC Securities previously launched a Singapore Low Carbon ETF in 2022, which outperformed the Straits Times Index in 2023.

“Investors want to do good, but they also still have a question mark in their minds, on whether green investments can outperform traditional investments,” Mr He said.

To this end, more investor education is needed on how portfolios are curated and for them to see that green companies will do well in the long run. The bank has a sustainability hub on the OCBC app where people can see how their investments rate on a green scale.

In the future, Mr He envisions stocks having labels that show how green they are, similar to the health labels on drinks now to show how much sugar they contain, on a scale. “We need a systematic methodology and we are working hard with data vendors,” he said.