Q1 market reset sparks jump in retail interest in SGX stocks

Singapore

THE market reset in the first quarter has sparked renewed retail interest in Singapore stocks, as first-timers found an opportunity to hunt for bargains while long-dormant investors scrambled to recalibrate their portfolios.

Stockbroking firms that The Business Times spoke to have all witnessed a surge in account openings and reactivations from January to March.

At OCBC Securities, more than 2,000 new accounts were opened in Q1. The number of customers who traded in Q1 2020 alone has already hit close to 90 per cent of the number for the whole of last year.

Most of these customers typically trade on the Singapore Exchange (SGX), and SGX trades made up 60 per cent of all trades for the last few months.

But in March, SGX stocks accounted for 73 per cent of all trades. This was an unusually high proportion, said Alvin Tham, head of the equities business at OCBC Securities.

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Mr Tham added: "Market valuation for equities had been high for the last few years and could have been a barrier to entry for investors.

"At the beginning of the (Covid-19) outbreak, many retail investors switched out of the equity market and into bonds instead. But when the market hit an extremely low valuation in March, we saw investors who had sold off their stocks returning, and others trying to come in for exposure."

Separately, from January to April, Phillip Securities received three times more new account applications than it did on average for the same period over the last three years. Most retail investors on the POEMS trading platform were buying into the Singapore market, followed by the United States and Hong Kong.

Ng Aik Hong, deputy head of Phillip Investor Centre, said: "We have also seen dormant customers returning to trade in the stock market. Some could have been waiting to catch the better bargains in the stock market.

"Blue chips including banks, aviation stocks, Reits and business trusts are the most popular products. Exchange Traded Funds (ETFs) are also especially popular."

DBS Vickers Securities said that its market share in terms of total volume traded grew in Q1 across both institutional and retail segments, with retail online trades registering the strongest uptick.

Lionel Lim, chief executive of DBS Vickers Securities, said: "Account openings and trading volumes have seen a pronounced pick-up across all brokerages in Singapore, including DBS Vickers."

The deep correction in March lifted transaction levels at UOB Kay Hian as well. Said senior executive director Esmond Choo: "There was a surge in new account openings in the first quarter due in part to the raised market interest and in part to the Central Depository announcing closure of dormant accounts causing CDP account holders without linkage to a trading account to rush to open accounts. This has resulted in a long backlog of new account openings."

Last month, iFAST Corp reported a record high for its Q1 profit and revenue as well as a net inflow of S$590 million in client assets despite the market sell-off.

Account openings in Singapore were "especially strong" as FSMOne.com is one of the few platforms where investors can open accounts seamlessly and begin trading relatively quickly, iFAST said.

In March, the daily average value of securities traded on the SGX surged to S$2.2 billion - a level not seen in years.

Trading activity slowed slightly in April and is back at February levels of S$1.4 billion. But this number is still higher than it was a year ago and remains strong in a historic context, analysts said.

Mr Tham of OCBC Securities noted: "There are a few major stock market cycles happening in one's lifetime and this is one of them unfolding now. There are huge trading opportunities and yet there are major pitfalls as companies' earnings get rebased over the next few quarters.

"We will likely see further interest in the equity markets in the second half of this year."