Aussie share traders are now hitting UK, US markets – here’s what they’re buying
Link copied to
Australian share traders are looking beyond the ASX market for investment opportunities and are increasingly dipping into international markets in Canada, Japan, the US and UK.
CMC Markets is the second largest retail broker on the ASX, and international share trading is a relatively small but steadily growing business next to its core market of ASX trading.
“Clients are not seeing international share trading as an alternative to ASX investing, it is seen as a complementary asset,” Andy Rogers, CMC Markets’ director of stockbroking said.
This holds true for most age groups from Millennials through to SMSF retirees.
“All stockbrokers have seen phenomenal interest in new accounts since the pandemic,” said Rogers.
“People are taking their own direction in terms of investment and having more time at home may be one factor. Generally, it is a result of low interest rates and people need a return on their money,” he said.
CMC clients can trade international shares through their existing ASX trading account.
This dispenses with the need for clients to hold a second share trading account for US stocks, a requirement still of some other stockbrokers.
“There is a convenience factor. With our solution there is no additional forms, you can open an account electronically and get your international account at the same time,” said Rogers.
There is zero commission on trades on Canada, Japan, UK and US share markets through CMC Markets’ platform, although there is a competitive charge for foreign exchange transaction costs.
US equity markets like the Nasdaq for tech stocks, and US household name companies hold the most allure for Australian share investors.
“The largest volume we see is typically for the US, followed by Canada which is very popular for the mining stocks, and then the UK and Hong Kong,” said Rogers.
Australian retail investors’ main target for international share trading is US stocks ranging in size from small caps right up to the largest mega stocks.
“Overwhelmingly, we see the majority of volume is in Tesla. That is our biggest traded stock and is the most widely held in terms of number of clients,” Rogers said.
Two years ago, when CMC Markets launched its international share trading service the largest stock by traded volume was Apple.
The recent share splits by Apple and Tesla have enabled smaller investors to participate in these two US tech stocks.
Other US companies to have piqued the interest of Australian investors are Amazon and Microsoft, alongside Walt Disney, and Warren Buffett’s company Berkshire Hathaway.
Snowflake, a cloud-based data warehousing company favoured by Buffett, has also attracted Australian share traders and has rocketed in price since its IPO last week.
Another US stock to find buyers among Australian share traders is Salesforce, a Software as a Service cloud-based firm that has enjoyed a share price rally.
|Rank by holdings value||Security|
|5||BERKSHIRE HATHAWAY CL.B|
|7||WALT DISNEY CO|
|11||ZILLOW GROUP INC|
|12||ALIBABA GROUP HOLDING LTD|
|13||VISA INC CLASS A|
|14||ATLASSIAN CORP PLC|
|15||PAYPAL HOLDINGS INC.|
|16||ADVANCED MICRO DEVICES INC.|
|17||TENCENT HOLDINGS LTD|
|19||TRADE DESK INC. (THE)|
|20||MASTERCARD INC CLASS A|
|22||BERKSHIRE HATHAWAY CL.A|
|24||WELLS FARGO AND CO|
Source: CMC Markets
For stock investing ideas, there are a range of sources from people’s individual experience of certain brands to specialist media, social media, and business news channels.
“Australian investors buy what they know, generally, and the same thing holds true for international stocks,” said Rogers.
“The retail investor is smarter than some of the professional investors would give them credit,” he said.
Stockbrokers also provide third-party research and tools for analysing company data.
In addition, a lot of Aussie investors cut their trading teeth on de-mutualisations, such as the privatisation of health insurer Medibank, and have ventured into other shares and sectors.
Investors are also following certain thematics as in medical and leisure market trends.
This includes pharmaceutical companies involved in developing possible vaccines for COVID-19 such as AstraZeneca, GlaxoSmithKline and Roche in Switzerland.
“There are some interesting companies that investors are researching and buying into,” said Rogers.
Another theme is cruise liner companies such as Carnival and Royal Caribbean which came into favour during the height of the COVID-19 lockdown in March, possibly because some of these cruise stocks were cheap, but also partly due to their volatility.
“There are patterns when certain stocks become popular and aren’t headline news,” said Rogers.
Australian investors were interested in Canadian medical cannabis stocks last year, and they have since moved on to Canadian resources stocks in gold and precious metals.
Traders also want access to international share markets so they can add specific shares to their model portfolios, such as Swiss industrial stock Nestle which is a popular choice.
There are also some interesting COVID-related trends in recent share trading activity.
“At the height of the lockdown in March, we noticed that when the markets fell there was huge buying on some of those days instead of panic selling,” said Rogers.
“We are seeing a lot of cash linked to people’s trading accounts, record levels in fact, that people are waiting to invest into the market when an opportunity arises,” he said.
This stockpiling of cash in trading accounts may be down to the low level of interest rates on alternative investments such as bank deposit and savings accounts, he suggested.
In Japan, Aussie share traders are picking up shares in Japanese carmakers such as Honda and Nissan, banks like SoftBank, and trading companies including Mitsubishi and Sumitomo.
“We looked at Japan as an experimental market as it trades in the same trading session as Australia,” said Rogers.
The most popular traded stock on the Hong Kong stock market is Chinese tech company Tencent which owns the WeChat messaging service, and e-commerce company Alibaba.
CMC Markets has added access to four other stock exchanges – Denmark, New Zealand, Spain and Sweden – to its trading platform in response to customer demand.
The trading platform now offers 26 stock exchanges in 15 countries providing retail and professional traders with access to 36,000 financial instruments, including 9,000 ETFs.