Tiger Trade Australia has launched at a precipitous time for global equity markets but the trading platform’s famed Aussie CSO says the platform has the tools for investors to make their best, informed decisions.

As volatility continues to play on global equity markets Australia’s newest mobile share trading platform Tiger Trade Australia is warning investors to prepare what could be – for many of its younger traders – their first real bumpy ride.

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Chief Strategy Officer Michael McCarthy told Stockhead with the US Federal Reserve overnight announcing a 25-basis point hike in the first round of rate increases expected this year – rising global inflationary pressures are putting all asset classes under pressure.

The Fed fired off what could be the first of six increases this year, becoming the first benchmark to raise with the bank flagging the prospect of another six increases.

The annual US inflation inflation rate has hit a 40-year-high and the European Central Bank has also been discussing wildly increasing inflation with war in Ukraine named as a root cause.

“The US 10-year bond yield is now at its highest level since July 2019 and is sending very clear signals the future of interest rates is upward,” McCarthy said.

“That’s very important because one of the biggest drivers of the huge run we’ve seen in equities locally and around the globe has been high liquidity and low interest rates provided by central banks to lift economies.

“Now that the process is reversing, we expect there will be a profound impact across the board and shares are certainly under pressure.”

Hawks send jitters on prey

McCarthy said central banks understand their hawkish approach could be disruptive to markets as they work to pull down inflation.

“They’re playing a very delicate game at the moment, central banks and the Fed in particular, because inflation is rampaging and that latest figure in the US of 7.9% is setting off alarm bells globally,” he said.

“Inflation has not been a big issue for markets since the 1990s and the last time we were in this sort of danger from inflation was the 1970s, so for a lot of investors, particularly those newer to the market we are about to go through a period unlike they’ve seen – and that’s a big change.

Unlearn all you know

“We are all about to get lessons in risk management, whether it’s the use of derivative tools at the more sophisticated end or power of diversification at the straightforward level.

McCarthy said a lot of investment strategies that have worked for many years now need close examination because of this environmental change in markets and economies.

“Some of the big moves we have seen in crypto recently are directly related to potential for higher interest rates,” he said.

Tiger Brokers Australia is led by Singapore-headquartered UP Fintech with Tiger Brokers (NASDAQ:TIGR) boasting some ~9 million users globally.

Tiger Australia gives local investors access to trade, not only the ASX, but on a broader basket of key global markets – including the US, Hong Kong equities, and ETFs along with US options at Tiger Trade.

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The Nasdaq-lister has nailed itself to the mast of market-leading technological advances, which it says provides the real-time tools necessary for investors to make quality, informed decisions.

“We don’t give advice and that’s not our role, but the economic data and charts are there for our communities to examine,” he said.

“It’s the charts which are really sending off signals to me – with the Nasdaq 100 sounding an alarm and coming off a long way from its recent peaks of around the 16,500 mark – right now just above 13,000.”

McCarthy said it’s the tech heavy Nasdaq which has led not only US, but global growth.

“A break of that 13,000 level may be a very negative sign for the near-term outlook so combined with the volatility has got higher and other technical indicators not pointing to an over-sold position and we may have a recipe for a significant move downwards,” he said.

The risk, however, may be hedged by options contracts if used properly.

Focus on US and Hong Kong markets

McCarthy said Aussie investors seem particularly focused on US and Hong Kong markets along with the local bourse.

“We are seeing the first focus for newer investors is the Australian share market, but particular interest is also the US and Hong Kong,” he said.

“US markets have been a big focus in recent years to individual investors which is understandable with a lot of people doing well out of the buy the dip strategy.

“But unfortunately, this sea change in the economic environment might mean the habits which investors have learned or profited from significantly over the last five or six years may come back to bite them.”

McCarthy said in the US the focus has moved to bigger name tech stocks like Meta and Tesla.

“Those household name big stocks are getting the attention whereas before we were seeing much more spread but it’s a noticeable phenomenon,” he said.

“There’s been a narrowing of the focus in the market and just as there were a handful of stocks that led the markets higher investors have turned their focus to those types of stocks and they have the potential to lead the market lower.”

Play in commodities market

McCarthy said naturally there’s been huge interest in Australian oil and gas, along with coal stocks.

“It is one: a factor of the situation in Ukraine and boycott of Russian energy, but two: because of the movement away from carbon there has seen a lot of under investment,” he said.

McCarthy said the surge in nickel prices last week could easily be repeated in other commodities.

“At the moment we have energy markets in backwardation which means traders are saying the current price is high but will fall soon but given the under investment we have seen that might not come to fruition and energy stocks could have a lot of catching up to do,” he said.

“So, we could see the situation where the share market is under a lot of pressure, but certain sectors shine because they’ve been unpopular in the past. “

He said at Tiger Trade investors can trade a range of ETF products which have commodities which are rallying such as gold or oil as their underlying assets.

Tiger undercutting rivals

Tiger Trade Australia has been in Australia for less than a month and is nicely positioned to do a number on older, almost legacy rivals, in both price and technology.

The platform is undercutting like a champion – offering zero brokerage on both US stocks and ASX shares for 3 months. Also resonating with an Asian-Pacific demographic – welcome gifts such as free Apple shares and stock vouchers.

“We’ve had a very rapid take up of the app and are listed in the top 10 list on google play app platform,” McCarthy said.

Options trading carries significant risk and may not be suitable to all investors.
Read PDS, TMD &FSG on Tiger Brokers(AU)’s website before trading. AFSL 300767.
This article was developed in collaboration with Tiger Brokers, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.