• Research shows Generation X the greater risk taker in a volatile market
  • Female investors more diversified in H1 2022 than in H2 2021 as markets take a hit
  • Investors decrease weighting of stocks and increase daily trading frequency

So, who do you think would be the most risk-adverse investors? Would it be young Generation Z, known as Zoomers, or their parents who tend to fall into the Generation X category? How about Gen Y (the millennials)?

Well if you thought Gen X, think again.  It turns out Gen Z investors are more risk-averse investors. Gen X, with less years until they hang up their work boots for a more leisurely existence, are the biggest risk takers.

A whitepaper released by Silicon Valley-founded online trading platform Moomoo and its Hong Kong-based parent company Futu Holdings (Nasdaq:FUTU) aims to reveal the trading behaviour of retail investors and investment strategy in response to heightened market volatility.

Investment values from users using Futu’s two flagship investing apps Moomoo and Futubull across three different regions including Hong Kong, the US and Singapore were compared using data on December 31, 2021 to that of June 15, 2022.

Investors’ average trading frequency per trading day was calculated using data extracted from the second half of 2021 (July 1-December 31) and first half of 2022 (January 1-June 15).  Investors’ investment value and trading frequency was compared by generation and male, female gender.

Market overview

Rising inflation, interest rate hikes, lingering concerns of Covid-19 variants and geopolitical tensions have taken a toll on global markets throughout 2022 including in the US and Hong Kong.

In the US the S&P 500 is now in a bear market having fallen more than 20% from its recent highs, while the Heng Seng (Hong Kong)  is in correction territory having fallen 10% from recent highs.

The Singapore Stock Exchange (SGX) is defying trends with a slight fall. The Straits Times Index (STI),  a market capitalisation weighted index that tracks the performance of the top 30 companies listed on SGX, is down 0.14% year to date.

Risk appetite among three generations

The data showed a different appetite for risk among the three generations. The oldest generation, X, were risk-seekers with their stock position the highest among all three generations.

The investing patterns of Gen X only slightly changed with a 2.8% decrease in stock investment value to 89.4% on June 15, 2022 compared to December 31, 2021.

But Gen Z were comparatively risk averse, and their equities investment declined 8.6% from 85.3% on December 31, 2021 to 76.7% on June 15, 2022.

In total Gen Z allocated 14.9% and 7.7% of their positions to funds and bonds respectively – the highest level among all three generations.

Gen X had 8.4% of their positions to funds and 1.8% to bonds, which was the lowest of all three generations.

Female investors diversify in 2022

Overall, male and female investors show similar investing patterns, with investments comprising mainly stocks (85%-92%), followed by funds.

However, female Hong Kong investors tended to allocate more bonds into their portfolios. As at June 15, 2022, 5% of female Hong Kong clients of Moomoo and Futubull investments were composed of bonds, which is 1.6% higher than male HK clients.

HK and Singapore female investors also executed more options during H1 2022. The daily amount of stock options executed by Hong Kong and Singapore female investors increased 11% and 21% respectively, compared to H2 2021.

Increase in daily trading and decrease weighting of stocks

Jittery investors tended to decrease the weighting of stocks and increase their daily trading frequency by June 2022, compared to their investment value and trading frequency at the end of 2021.

Compared to the level at the end of 2021, investors from the US recorded a decline in stock weighting to 3%, Hong Kong 4.3% and Singapore 4.4%.  US investors opted to diversify their portfolios with fund products, with the proportion of fund value climbing to 13.2% in June 2022 from 8.8% in December 2021.

Singapore investors traded 0.35 times per trading day, US investors traded 0.43 times, representing an increase from 26.5%. while Hong Kong investors traded one time.

US investors’ average daily trading frequency jumped to 0.43 times in H1 2022, representing an increase of 26.5% from H2 2021.

Singapore investors traded 0.35 times per trading day while Hong Kong investors traded one time.  Hong Kong and Singapore investors executed 20.5% and 52.2% more trades respectively in H1 2022 than H2 2021, respectively.