New data from NAB showed young traders entering the market in record numbers in 2018, with Gen Z and Gen Y investors recording the biggest gains- – up 73 per cent and 20 per cent respectively in the 12 months to 31 December 2018.
“Over the past two years, we have seen a significant rise in the number of young investors turning to the sharemarket for wealth creation,” said Gemma Dale, nabtrade Director of SMSF and Investor Behaviour.
“These are serious investors, who are studying the local and international sharemarkets closely and buying shares they know, and investing for the long term.”
Total domestic turnover rose 2 per cent in the 12 months to 31 December 2018, with the number of customers with local shares rising 13 per cent.
Ms Dale noted that while there was little movement in the top 10 domestic holdings across the generations, investors reweighted their sector exposures throughout the year.
“Our data showed Baby-Boomers and Gen X investors reduced their overall exposure to financials, consumer discretionary and telcos but increased their holdings in healthcare, consumer staples and material stocks,” said Ms Dale.
“This reflects their concerns about headwinds facing these sectors but also a recognition of how heavily overweight some of these much-loved sectors had been for long term investors.
“Interestingly, Gen Y investors slightly increased their exposure to financials during the year by 1.5 per cent but reduced their holdings in materials, healthcare, consumer discretionary and telcos.”
The top ten domestic buys among Baby-Boomers and Gen-X remained traditional blue-chip stocks such as NAB, CBA, Westpac, BHP and Telstra, while top picks among Gen Y and Z investors were A2 Milk, Afterpay; AMP and Vanguard’s ASX200 ETF.
According to NAB, some of the top international buys for investors in 2018 were Tencent, Tesla, Facebook, Netflix, Alibaba, Apple, Amazon and Visa.
“The number of new customers dabbling in international shares also rose 32 per cent, led predominantly by Gen Z, Gen X and Gen Y investors. Gen Y investors now represent the largest cohort of investors who traded international shares last year,’’ Ms Dale said.
“Australian investors, particularly younger investors, understand that while the Australian sharemarket offers some great opportunities, many critical, fast-growing sectors are not well represented on the local bourse.
“These investors are generally pursuing two key thematics – technology, and the rise of the Asian consumer, and they’re choosing to do that directly into the US or Asian markets.
“This was visible in the top ten international buys last year.’’
The falling property market
A recent report by KPMG economics shows property prices in Melbourne and Sydney will continue to fall in the near term before recovering in 2020 and 2021 respectively.
CoreLogic data from December shows Sydney is now 11 per cent down from its July 2017 peak, and Melbourne is about 7 per cent down from its November 2017.
For DomaCom chief executive Arthur Naoumidis, a key message to investors has been skated over among the doomsday predictions.
“When prices go down, yields go up. There will be some point in 2019 that yield is going to be so attractive,” Mr Naoumidis told Accountants Daily.
“What do property investors care about? The medium to long-term capital growth and rent.
“If your horizon is two years, not great. If your horizon in 10 years, while yields improve and you buy low… that is so attractive.”