The London Stock Exchange hosted a webinar last week on this crucial topic. It was moderated by PrimaryBid’s COO and included an Expert Panel made up of the LSE’s Head of UK Primary Markets, Angela Knight CBE, the Chairman of Share Centre, plus the CEOs of Interactive Investor and Equity Development itself.
For those who just want to know some of the key stats and updates, here is what WE found fascinating from the debate:
Where did the ‘spivvy day trader’ go?
It turns out he is the bogeyman of integrated banks dreams, as less than 50,000 individuals in the UK trade more than 30 times a year. When ISAs were first permitted to invest in AIM shares, £4.5bn was moved into this tax efficient wrapper designed for long term capital appreciation. The reality is that discerning, thoughtful, retail investors are looking after their long term wealth, NOT trading in and out on a whim.
How do retail investors behave?
Generalisations are a dangerous thing…but even with plunging stock prices in March, the day with the highest volume of trading still only saw sell orders match buy orders ie a 50:50 split. On all other days the percentage of buy orders outweighed sell orders from retail investors. Retail investors have seen recent market volatility as a prime opportunity to increase their positions in their favourite stocks.
Are the number of retail investors growing?
Online share platforms have seen an increase in account openings of 300-400% in the last couple of months with 60% of funds being invested directly into equities. Contrast this with the huge rise in passive funds amongst the fund management community and you can easily conclude who is dictating the day-to-day share price via trading volumes.
Is engaging with retail investors getting easier?
Categorically YES. The rapid, and necessary, adoption of online communication means expectations are also shifting rapidly. Quoted companies can only benefit from maintaining a continuous dialogue with ALL shareholders now everyone knows how easy it is (podcasts, webinars, interviews, social media and publicly available research notes). Disenfranchising a huge pool of capital can only be to the detriment of their reputation over the long term.
We are here to help companies communicate with all investors, large or small, via research, video, audio and webinar. If you would like to understand more about how you can best communicate to an ever growing pool of investors, please get in touch with Andy Edmond or Hannah Crowe.