New trading data shows Aussie investors with a global lean are still keen on the US tech giants
While the ASX’s rally has been impressive, share markets globally have thrown up some interesting investment opportunities over the last couple of months.
And Australian traders using the eToro platform have shown a preference for US tech stocks as the COVID-19 rally extended its gains.
Compared to the April surge, monthly data from eToro showed trading activity dipped slightly in May. Nevertheless, major tech players such as Amazon, Facebook and Netflix all held their spot in the Top 10 most-bought list.
This month though, each of those tech titans was outranked by Microsoft, which rose to the number-two spot — up one notch from April.
“Microsoft, as with much of the technology sector, has benefited from the increased demand for cloud services, communication software, and collaboration software during the lockdown,” eToro analyst Mathew De Corrado said.
“Overall, the information technology sector has outperformed the S&P500 since the start of the year, with May being the third best performance for the sector over the past 12 months.”
However, while Aussie traders on eToro are partial to the big US tech companies, the most-purchased stock in May was from a little further left-field — Hong Kong-listed Ping An Healthcare and Technology Co.
The Shanghai-headquartered company has benefited from the trend towards viable healthcare plays in the wake of the pandemic, to climb from March lows beneath $HK60 (~$11.40) to more than $HK100 (~$19).
De Corrado said that increase had been accompanied by “Chinese government policy announcements, following the dramatic impact COVID-19 had on its economy and population”.
“The COVID-19 virus revealed how underprepared the Chinese healthcare sector was for a virus of this magnitude, and how quickly medical infrastructure, staff and resources need to be upgraded to cope for future crises,” he said.
“For context, China only has 1.8 doctors per 1000 people compared with 2.4 per 1000, and 2.8 per 1000 in the US, and UK respectively.”
De Corrado cited similar gains in other China-based healthcare stocks including Alibaba Health Information Technology, which has more than doubled in value since the start of the year.
Elsewhere, new additions on the Top-10 list included Beyond Meat, the plant-based meat producer which soared following its IPO last year before an equally sharp decline.
But the stock is back in favour with investors, having tripled from its March lows to be trading above $US150 (~$215). And it jumped from number 26 to third spot on eToro’s trading list, following a 183 per cent surge in trading activity.
De Corrado attributed the stock’s performance to a big Q1 earnings beat in early May, along with positive developments associated with both COVID-19 and opportunities in China.
“During the first quarter, COVID-19 shutdowns have impacted meat processing plants (mainly pork and beef), giving Beyond Meat the opportunity to capitalise and gain market share,” he said.
In addition, “in late April, Beyond Meat announced that it had officially entered the Chinese market by partnering with Starbucks, with approximately 3,300 locations across China, which was seen as another big win for the company”.
Another COVID-19 winner was Home Depot (a US version of Bunnings) “with many homeowners now finally having the time to complete their DIY projects”. The stock rose from number 46 to the eighth most-purchased company on the eToro platform in May.
While it only launched in Australia last year, eToro is one of a number of platforms competing to provide simple access to global markets for Australian investors.
De Corrado cited a recent Deloitte survey that said only around 11 per cent of Australian retail investors had exposure to international stocks, adding that eToro’s primary focus is on the US market, which accounts for around 80 per cent of trading volume on the eToro platform.