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Attracted by various commission-free brokerage schemes, coupled with the impact of the epidemic’s domestic ban, retail funds filled the stock market this year. Latest data shows that this wave of retail transactions appears to be reshaping the stock market of USA and bringing a different market perspective.
Retail trade volume is at a ten-year peak
Larry Tabb, director of market structure research at Bloomberg Intelligence, said the share of retail investors in market transactions is now higher than at any time in the past 10 years. Tabb predicts that in the first half of this year, individual investors accounted for 19.5% of the US stock market’s trading volume, up from 14.9% last year, and nearly double the amount in 2010.
Joe Mecane, Citadel Securities Executive Service Director, said that for part of this year, individual investors accounted for about a quarter of market activity. Mecane believes that the current situation is similar to the dot-com bubble of the 1990s, when securities brokers developed through the Internet made it easier to trade stocks.
Late last year, American brokers like Charles Schwab launched zero-commission services to attract more retail investors to the stock market. Mecane said: “This is indeed the beginning of a similar trend. At that time, technology and business innovation provided the first attempt at instant execution and self-directed retail investment.”
“Ant Heroes” Retail Investors Drive Small Stock Rebound
This situation is also known as the Robinhood effect, which is different from the economic meaning. Robinhood here refers to Robinhood, an online brokerage firm, which promotes the willingness of retail investors to invest through zero-fee discounts, which in turn drives irrationality in the stock market. Trend.
Nick Maggiulli, COO of Ritholtz Wealth Management, said that in fact this kind of trading activity is irrelevant to the vast majority of stocks, but there is evidence that some small stocks have a Robin Hood effect.
Maggiulli conducted research on the relationship between Robinhood users’ shares and share prices. The study results found that some of the most popular stocks, such as Apple (AAPL-US) and Tesla (TSLA-US), showed a weak correlation, and Google’s parent company Alphabet. (GOOGL-US) has a negative correlation, which means that as more Robinhood users buy the shares, the price of the shares is likely to fall.
However, Maggiulli found that Eastman Kodak (KODK-US), electric vehicle startup Nikola (NKLA-US), and biotech company Novavax (NVAX-US) have become more popular with Robinhood users in recent months. . The stock price trend is highly correlated, showing that platform users have some power to drive the stock price.
The Asian market is heavily dominated by retail investors
Unlike US stocks, which are flooded with large institutional investors, many Asian stock markets are dominated primarily by retail investors. According to statistics compiled by Hee-Joon Ahn, professor of finance at Sungkyunkwan University in Seoul, personal transactions on the Shanghai Stock Exchange generally account for more than 80% of the total transaction volume. Furthermore, this year, nearly 84% of transactions in the South Korean Kospi index market are invested by individuals. 者 was carried out.
The South Korean stock market is made up of a large number of individual transactions that can be explained by the following reasons: less developed mutual fund transactions, a population structure that relies heavily on mobile phones for ordering, and brokers , to survive, reduce transaction fees to almost zero And other factors.
More and more stocks are moving towards “ Dark Pool Trading ” (Dark Pool Trading)
The retail investment boom has also pushed dark group transactions to all-time highs, as online brokers generally concentrate retail transactions in e-commerce companies that execute orders. Unlike general public trading, dark group trading uses anonymous pairing of buyers and sellers for stock trading, which is a form of over-the-counter trading and is relatively opaque in operation.
Securities firm Rosenblatt Securities stated that about 43.2% of the trading volume of stocks in the United States in July this year was over the counter transactions, the highest level since 2008.
Among them, United Airlines (United Airlines) and other stocks that are more popular with small investors are more likely to fall into the dark market. According to Rosenblatt data, in July this year, about 62.6% of United Airlines transactions were OTC transactions.
E-merchants become the biggest winners
According to data from Bloomberg Intelligence, as of June this year, the top three e-commerce platforms, Citadel Securities, Virtu Financial and Susquehanna International Group LLP, had total over-the-counter capital of approximately 69.4 billion shares, three times the last November. Mainly from retail investors.
Take Virtu, which is listed on the Nasdaq, for example. In the second quarter of this year, the company’s net business income doubled compared to the same period last year, reaching US $ 744 million. How much of the revenue comes from retail transactions is revealed, but CEO Douglas Cifu once said on the earnings call in August that for Virtu, the retail transaction boom is a major driving force.
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