Online investors take fright amid volatility
The number of investments being made online has fallen significantly amid the market downturn and the threat of rising inflation and interest rates.
According to the Investment Trends 2022 First Half Australia Online Investment Report, an estimated 1.47 million unique individuals placed at least one trade over the 12 months to the end of June 2022, down from 1.52 million for the year ended November 2021.
Irene Guiamatsia, head of research at Investment Trends, said the research highlighted that two key engines of growth softened during the period. Firstly, the inflows of first timers continued to shrink towards pre-pandemic levels, while surging dormancy rates persisted with some 250,000 investors halting their trading activity in the last reporting period.
“It is common to see market downturns induce a paralysis of sorts, as many opt for a wait-and-see approach in turbulent times,” said Guiamatsia.
“Our Monthly Investor Intentions Index indicates investors’ average return expectations for domestic equities dropped below the psychological barrier of zero in June 2022 (0.5% down from 3.4% in November 21), the first negative measure recorded since the start of the pandemic,” she added.
Despite the downturn, the report added that the majority of dormant investors expressed a strong interest in re-engaging in the not-so-distant future. To assist this, it stated the ability of online platforms to provide “relevant educational support to shore up confidence” will be a key determinant to successfully maintain engagement.
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