Saxo Markets: Recent trading flow among Aussie investors was dominated by big miners and big tech
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September proved to be an interesting month in post-COVID bull markets, and data from SaxoBank shows where Australian investors were positioned on its trading platform.
Saxo Markets is one of the trading platforms competing for market share with Australian investors.
Like other platforms such as Stake and eToro, it offers exposure to both domestic and international equities (19,000 stocks and 3,000 ETFs).
Saxo’s latest data release shows the Top 10 most commonly traded stocks on its platform in the month of September.
Big ASX miners and big US tech stocks dominated the trading flow. But as stocks came off in September, not all of those trades were profitable.
And the mixed returns are perhaps evidence of the more complex investing environment taking shape as the world emerges from the pandemic.
“Energy markets are in disarray, the threat of inflation draws ever closer, and consumers are still spending like it’s going out of fashion,” Saxo Markets said.
July was a bumper month for Australia’s mining majors, as iron ore prices held near record highs above US$200/t and investors prepared for some monster full-year dividends in August reporting season.
Pure-play iron ore stock Fortescue (ASX:FMG) partially tracked those falls, slipping back from all-time highs above $25 to below $20 by August 23.
Saxo Bank’s data indicates that investors were backing a rebound in September, with FMG and BHP (ASX:BHP) taking out spots 2 and 3 respectively on the platform’s most traded list.
However, buyers caught a falling knife as iron ore prices continued to dip while troubled Chinese property developer Evergrande’s debt problems exacerbated fears of a second-half demand pullback from the world’s biggest iron ore consumer.
After starting September above $20, Fortescue finished the month below $15 while BHP fell from ~$45 to ~$36.
“Anyone who took a short position against BHP Group in September would have felt vindicated, given how much the share price has dropped in recent weeks,” SaxoBank sales trader Junvum Kim said.
However, the ‘Big Australian’s’ diversified product base gives it a more varied outlook in the years ahead.
“The main factors in the declining share price are BHP’s announcement of major investments in recent weeks that will add to its short-term debts, including its huge expansion of potash mining operations and its ongoing merger deal with Woodside,” Kim said.
“Furthermore, the continued Chinese ban on Australian coal products is likely to be felt for the foreseeable future. Nonetheless, BHP’s continued investments in green energy production could pay off in the longer term.”
Switching from big resources to big tech, the most popular stock with Saxo Markets investors in September was Apple Inc.
Kim said trading interest in Apple typically surges when it has new products coming out, and this year the new iPhone launch took place smack bang in the middle of September.
That said, the maturity of its core product category mean the market moves are often less pronounced these days, and shares in Apple edged lower following the iPhone 13 release.
Occupying positions 4-6 on the list were three other US tech giants, Tesla, Amazon and Microsoft (respectively).
While a number of leading tech names came under pressure in September, Tesla held its ground with a monthly gain of around 5%.
Along with the news-attracting founder Elon Musk, Tesla’s brand has become synonymous with the electric vehicle transition and “it should come as no surprise that Tesla shares continue to be in high demand among our Australian clients”, Saxo Markets said.
“Expect even more frenzied stock activity ahead of Tesla’s highly-anticipated quarterly earnings report, to be announced at the company’s Austin, TX gigafactory on October 7.”
Australian investors also continue to take an interest in the NYSE-traded shares of Chinese ecommerce giant Alibaba, which has taken a beating over the past 12 months.
Shares in BABA reached highs above US$300 last October, just before co-founder Jack Ma criticised Chinese authorities over their regulation of the fintech sector.
A proposed Hong Kong listing of Alibaba shares was then aborted, Ma has barely been spotted in public since and BABA shares now trade below US$150.
Saxo Markets said the stock faced ongoing headwinds in September amid the “continued tightening of Chinese regulations around tech giants”.
“This includes plans to compel companies like Alibaba to donate billions of dollars to the government’s Common Prosperity Fund,” Saxo Markets said.
Also in the top 10 for September were two ETFs, starting at No 7 with the Vanguard Australian Shares Index ETF, which tracks the performance of the largest 300 companies on the ASX.
“With more than $9.6 billion in the fund itself, the ETF has grown more than $17% in the year to date,” Saxo Markets said.
The other popular ETF — Invesco QQQ Trust, Series 1 — gives investors exposure to big US tech names on the Nasdaq 100.
The QQQ Trust “continues to be one of the single best performing large-cap growth funds on the market right now, with stellar growth throughout the year being driven by the dominance of US tech stocks,” Saxo Markets said.