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How Retail Traders Are Reshaping Online Investing Around the World

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Retail traders are fueling the rise of online investing worldwide, with investors from North America, Asia and Oceania and Europe behind this rapid increase.

Latin America, the Middle East and Africa remind behind these top markets for investing, but these regions are participating in online investments and trading much more than in years past. Investing has moved beyond the traditional scope of brokers and wealth management in recent years and into the hands of everyday retail investors worldwide.

These investors engage in online investing and e-trading with financial assets, including stocks, mutual funds, futures, options, cryptocurrencies, and fractional shares. They are seeking new ways to invest and new platforms to support their financial goals. 

The popularity of online investing quickly rises worldwide and is driven by easy access to trading platforms and investment information.

And this growth shows no sign of stopping anytime soon, with the number of people using trading apps soaring from 35.6 million in 2017 to over 150 million in 2021, and this emerging investor class fueled revenues for trading platforms from $3.8 billion to $10.9 billion in over this same period (Business of Apps). 

Understanding the Top Global Trends in Online Investing 

Today’s global retail investors can invest in assets with no more than a minimal balance, an internet connection and a digital trading platform. Involvement in trading and investing varies widely by region, with North America and Asia as the hottest markets for online trading, with Europe not far behind.

South America, the Middle East and Africa are coming into their own for digital financial services, and these regions’ top local markets are beginning to participate in investing and trading online.

North America

According to Pew’s research, more than half of US households invested in the stock market directly or indirectly through retirement accounts (Fortune Business Insights). Although online investing was already popular in North America, investments from ordinary retail investors picked up pace during the pandemic, with 39% of Americans surveyed reporting investing in the past year (Finder).  

How did retail investment in North America change during and post-pandemic? 

  • Over six million Americans downloaded a trading app in January 2021
  • 39% of Canadians currently own stocks. And over one-third (34%) bought shares in just the last year (Finder’s Global Investing Adoption Survey)
  • Ten million US investors opened a new brokerage account in 2020
  • Around 12.3 million Canadian adults report using a stock trading app, with over half (53%) of millennials investing using a mobile service (Finder)
  • 80% of respondents from Mexico wanted to invest early would help them safeguard their future, but 60% said they do not have enough money to start investing (The Dialogue). 
  • One recent survey found that just 13% of Mexicans were invested in shares, although 27% plan to invest in the next year (Finder).

Latin America

There is growing enthusiasm for investing and online trading in South America, but on a much smaller scale than in North America. This is due to more limited financial digitalization and technological access, fewer financial resources and lower regional financial literacy. 

According to a survey by Americas Market Intelligence and MasterCard, 80% of the respondents from Brazil knew that investing early would help them safeguard their future, but 60% said they do not have the resources to begin (The Dialogue). While high net worth investors have already started diversifying their investments and investing in North American markets, most South American consumers will need more resources and access before getting involved with trading (Morgan Stanley). 

Additionally, the region was hit hard by the pandemic, drying up limited resources for investment, as 30% of investors in the region reported a severe setback to their financial security due to Covid (Natixis Investment Managers). That said, the COVID did bring some positive shifts to the region by accelerating the consumer and business adoption of digital services and financial products across all socioeconomic groups (The Dialogue).  

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Europe

European investors tend to be risk-averse and prefer investing in conventional bank deposits to stock markets. However, low-cost trading platforms, access to more savings as investors stayed home, and rising stock market returns have led more European investors to try online stock trading. Low-interest rates and unsustainable pension systems also drive more Europeans to engage in online trading (Financial Times).

  • The beginning of 2022 saw European shares selling at all-time highs (Reuters)
  • 21% of Italians surveyed reported investing in the stock market, with nearly 28% planning on engaging this year
  • Estonia is the only country where more than 50% invested in stocks
  • eToro is the most popular trading app in Europe, followed by Plus500 and Trading 212 (Business of Apps)

Africa and the Middle East 

The investment landscape is very different in the Middle East. Investors are less exposed to trading and other investment instruments than investors in other geographies. Fewer than 3% of the population invests in financial assets (Tech Crunch). Many investors rely on traditional methods to open and manage their investment accounts (Pymnts). However, high-net-worth investors have heavily invested abroad and are looking for more opportunities.

  • South Africans are eager to invest.  37% surveyed in the rainbow nation reporting owning shares, and 33% reported investing in the past year (Finder)
  • The World Bank estimates that the Middle East and North Africa region’s economies will grow by 5.2% in 2022, the fastest rate since 2016. However, great uncertainty remains in these markets and in investor activity post-pandemic.

Asia and Oceania

Typically, investors in Asia invest in conservative options such as bank deposits, real estate, and government schemes. However, the dip in interest rates, the desire to earn more income, and increased access to online investing platforms have created more opportunities for young, middle-class, tech-savvy investors.

  • Malaysia reported over 270% increase in account openings as of October 2020 (Financial Times)
  • Zerodha, one of India’s largest online trading platforms, doubled its monthly customer acquisition numbers during the pandemic
  • AAA Equities based in the Philippines also reported a three to five times surge in new accounts
  • In Japan, young investors, especially women in their 20s and 30s, are moving from bank deposits that offer near-zero returns to the international stock market and multi-asset funds. They aim to diversify their holdings and build passive income for their future (Reuters)
  • In Australia, micro-investment apps grew popular as more than double the number of customers opened accounts in 2021 (Syndey Morning Herald)

The World Is Ready For Online Investing: Are You Ready for Today’s International Investors? 

The pandemic has propelled investors worldwide to invest in stocks, ETFs, and other investments to earn passive income and save for uncertain times. North America is a leading market, with Europe expecting steady growth as more countries embrace investing as a way of life. Asia and Oceania are becoming some of the fastest-growing markets for online investing, with investors eager for new ways to invest and better trading experiences, while South America, the Middle East and Africa are still developing the infrastructure they need to support retail investors. 

Over the past few years, investing platforms and online trading apps have eliminated barriers and simplified investing for beginners and non-traditional investors from all backgrounds and from all around the world, making the future of online investing brighter than ever.

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Sources Cited

Natixis. 2021 Global Survey of Individual Investors. The Next Normal Are investors prepared for post-Covid markets? 2022. https://www.im.natixis.com/us/research/2021-natixis-global-survey-of-individual-investors 

 Forecast of the global online trading market 2028 | Statista.” 11 Jan. 2022, https://www.statista.com/statistics/1260026/forecast-global-online-trading-platform-market/

“Online Trading Platform Market Size, Share and Growth [2028].” https://www.fortunebusinessinsights.com/online-trading-platform-market-104934

The rise of newly empowered retail investors – Deloitte.” 22 Feb. 2021, https://www2.deloitte.com/content/dam/Deloitte/us/Documents/financial-services/us-the-rise-of-newly-empowered-retail-investors-2021.pdf

Will Latin Americans Save and Invest More After the Pandemic?.” 7 Apr. 2021, https://www.thedialogue.org/analysis/will-latin-americans-save-and-invest-more-after-the-pandemic/

“Latin American Investors Look North to US Markets | Morgan Stanley.” https://www.morganstanley.com/ideas/latin-american-investors

“Europe’s cautious savers catch on to share-dealing craze.” 27 Feb. 2021, https://www.ft.com/content/31c4d453-498e-4cc2-b14f-d7e8b17b9221

Egyptian investment app Thndr nabs $20M from Tiger Global ….” 9 Feb. 2022, https://techcrunch.com/2022/02/08/egyptian-investment-app-thndr-nabs-20m-from-tiger-global-prosus-and-others/

 “Democratizing Investment Opportunities for MENA | PYMNTS.com.” 25 Feb. 2022, https://www.pymnts.com/financial-inclusion-3/2022/democratizing-investment-opportunities-for-mena-underbanked-populations/..

“Millennials are piling into stock trading in Asia. Here’s how to make ….” 5 Jul. 2020, https://www.cnbc.com/2020/07/06/investing-advice-how-to-start-trading-in-india-philippines-singapore.html

 “Chinese investors are picking other assets over stocks – CNBC.” 15 Aug. 2018, https://www.cnbc.com/2018/08/15/chinese-investors-are-picking-other-assets-over-stocks.html

 “Japan’s younger Watanabes seek more diverse portfolios | Reuters.” 8 Jan. 2019, https://www.reuters.com/article/us-japan-investment-watanabes-idUSKCN1P22C2

 “Micro-investing apps hit the big time – Sydney Morning Herald.” 16 Nov. 2021, https://www.smh.com.au/money/investing/micro-investing-apps-hit-the-big-time-20211111-p59867.html

 “Democratizing Investment Opportunities for MENA | PYMNTS.com.” 25 Feb. 2022, https://www.pymnts.com/financial-inclusion-3/2022/democratizing-investment-opportunities-for-mena-underbanked-populations/..

“Finder’s Global Investing Adoption Survey” https://www.finder.com/ca/stock-trading-statistics 

World Bank. MENA Economic Update: Reality Check: Forecasting Growth in the Middle East and North Africa in Times of Uncertainty. APRIL 14, 2022. https://www.worldbank.org/en/region/mena/publication/mena-economic-update-forecasting-growth-in-the-middle-east-and-north-africa-in-times-of-uncertainty 

Photo by Mikhail Nilov for Pexels

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