COVID-19 SPECIAL

More people trading and investing during Covid-19 pandemic

The market turnover value of exchange-traded funds increased more than eight times year on year to $1.2 billion.
The market turnover value of exchange-traded funds increased more than eight times year on year to $1.2 billion.PHOTO: ST FILE

Swings in the market caused by the uncertainty and volatility from the coronavirus pandemic have led to more people getting into the stock market and starting their investment journey.

Brokers and experts in the field said there was an increase in the number of people trading and investing in the first half of this year, as they sought to take advantage of a market correction.

The Singapore Exchange (SGX) noted that since February, the monthly number of Central Depository (CDP) account openings has seen an increase compared with the same month in the previous year, with a particular spike observed in March to June.

A CDP securities account is needed for people to start trading.

The SGX also observed that from February to July, the number of CDP account openings was more than 2½ times that in the same period last year.

This aligns with the heightened activity in financial markets during the period. In an April report, the SGX noted that the Straits Times Index's 30-day volatility increased to 51.7 per cent on March 31, the highest level since December 2008.

The volatility also drove total securities market turnover value up, causing it to jump by 124 per cent year on year in March to $48.2 billion, the report said, while the securities daily average value rose 114 per cent year on year to $2.2 billion.

The market turnover value of exchange-traded funds (ETF) increased more than eight times year on year to $1.2 billion.

Standard Chartered Bank Singapore said it has seen a 200 per cent growth in trading volumes and a 20 per cent increase in account applications for the bank's online trading platform in the first half of this year.

Mr Mark Chia, the bank's head of managed investments and equities, said: "The Covid-19 pandemic has triggered a liquidity-driven market rally amidst unprecedented fiscal and monetary policy stimulus. Investors are also becoming more financially savvy. They are familiar with investment concepts such as 'buying on dips' and 'dollar-cost averaging'.

"These investors view the current volatile equity markets as an investment opportunity. More flexible work schedules and being able to conveniently access equity markets digitally are also contributing factors."

 
 
 

DBS Bank said that over the past few years, it has already observed an increasing number of customers wanting to invest their money and to trade, especially among those aged 45 years and below.

"This was pronounced in the first quarter of this year, when the market experienced a correction, where we witnessed a surge in investment demand like many others in the industry," said Ms Evy Wee, the bank's head of financial planning and personal investing. "Total new-to-trading DBS accounts opened in the first half of the year more than doubled that of full-year 2019."

She added that the bank also saw record levels of self-directed investing activities around equities and foreign exchange trading, investment of funds, DBS InvestSaver plans and the bank's digital portfolio.

"This means more customers have come forward to set up regular investing plans, while some of our existing customers have gone on to increase their monthly investment amounts," she said.

"Similarly, some of our retail and wealth customers who are invested in DBS digiPortfolio have also topped up their investment portfolios. Others have chosen to purchase funds or unit trusts as a start to their investment journeys."

OCBC Securities observed that the average monthly number of new accounts has more than doubled compared with the period before the Covid-19 outbreak.

Trading volume also jumped close to 80 per cent when comparing the first half of this year with the second half of last year.

Mr Samuel Wong, OCBC Securities trading strategist, noted: "With more than 30 per cent correction in most major global markets potentially happening within a short timeframe, investors and traders may be emboldened to engage in more investments."

 

Mr David Gerald, president of the Securities Investors Association (Singapore), said he noted that there has been growing retail participation in the local stock market and more retail investors opening accounts especially after a fall in prices in March.

"This increase in retail participation is not just confined to local brokers. We note more retail participation in foreign exchange trading and also trading in other markets like the United States."

But first-timers should be careful especially during this time, he said. "Investors are advised to familiarise themselves thoroughly with all the risks and features of the investments they are considering with an experienced financial adviser before taking the plunge.

"Retail investors who have entered or re-entered the market over the past few months with hopes of making a quick buck could very easily have found themselves caught on the wrong end of a trade."

 
A version of this article appeared in the print edition of The Straits Times on September 26, 2020, with the headline 'More people trading and investing during Covid-19 pandemic'. Subscribe