Hot share market attracts a younger crowd

The share market is hot at the moment – and not just in terms of the levels of the ASX 200 and individual share prices.

Perhaps it was the pandemic lockdown or there has simply been more of a focus on getting investments other than cash with interest rates so low, but the picture emerging is that there has been an amazing uptick in people trading and investing on the share market.

One of the more interesting pieces of evidence supporting the hot market observation was contained in the Commonwealth Bank (ASX: CBA) profit result, which also outlined the activities of its online broking arm CommSec.

CommSec signs on 230,000 new investors

Indeed, CommSec was one of the really big features of the $4.87 billion first-half profit, with 230,000 new users joining just in the last six months on the back of a trading boom.

It may be anecdotal at this stage, but the majority of these new accounts seem to be younger investors, with 70% of the new users trading via the normal app or the micro investment app CommSec Pocket.

The CommSec pocket app alone had attracted 170,000 customers that have invested over $360 million since its launch, with 80% of those users under 40 years old.

Together with existing customers and the stunning market recovery in the second half of last year, trading volumes for CommSec have been soaring, with $110 billion moved between July and December.

Trading volumes double as activity increases

That is double the figure for the same period last year and it will be interesting to see if other big brokers owned by the major banks have experienced a similar rise in users and volumes when their results are released.

The pick-up in CommSec’s trading activity was so great that the bank hired more call centre staff, with staff numbers across the bank up by a solid 9% over the half year.

CommSec is also making more money with a rise in reported income from $134 million in the first half of 2020 to $256 million in the first half of 2021, with reported income just under $500 million for the last year.

Another factor that could be driving up trading volumes is the flurry of US share market action – particularly the WallStreetBets Reddit forum’s highly successful short squeeze on hedge funds that had shorted international electronic games retail chain GameStop.

GameStop drives Australians to trade US market

Again, the evidence is largely anecdotal but there has been a lot of activity from Australian investors keen to trade in US shares and also copying US strategies on the Australian market.

While the controversial Robinhood trading platform that stopped taking new orders for GameStop doesn’t operate in Australia, there are a number of Australian platforms that allow locals to trade US stocks, including eToro, IG, CMC Markets, Saxo Capital Markets, Stake and SelfWealth.

All are thought to have been signing up new investors who don’t mind missing out on some sleep to trade the US market and its arguably greater price volatility and much bigger range of investment options, particularly in technology.

There has also been a bit of a local boom in new broking players with the founders of Afterpay (ASX: APT) and Zip (ASX: Z1P) raising money before an eventual float of Superhero in the coming year.

Superhero had attracted 35,000 customers at the end of January.

Another already listed broker, SelfWealth (ASX: SWF), has quickly built up a customer base of 67,000 active traders – more than tripling customers in the past year.