2015 First Half Australia Trading Behaviour Report ... · Suite 2102, Goldfields House 1 Alfred...

Survey Highlights

2015 First Half Australia Trading Behaviour Survey

© 2015 Investment Trends 1

2015 First Half Australia Trading

Behaviour Survey

Highlights from the Investment Trends


1Copyright 2015 Investment Trends Pty Ltd. 2014 Second Half Australia Online Broking Report. Confidential. Investment Trends internal use only. Reproduction prohibited.

Survey concluded: June 2015

Reproduction prohibited

2015 First Half

Australia Trading Behaviour Survey

Highlighted Findings

Survey Highlights



Thank you

Thank you again for taking part in our 2015 First Half Australia Trading

Behaviour Survey.

Your responses, together with those of other investors, provide a valuable

insight into the current state of the Australian investment landscape. The

resulting research will help stockbrokers and other providers create products

and services better suited to your needs.

The 2015 First Half Australia Trading Behaviour Reports provide a detailed

portrait of Australia’s sophisticated population of active share investors and

CFD traders. Many key findings are highlighted in this extract, including some

fascinating insights into the behaviour of your fellow investors.

I hope you find it interesting.

Yours sincerely,

Mark Johnston

Principal

Investment Trends

Suite 2102, Goldfields House

1 Alfred Street

SYDNEY NSW 2000

Australia

Survey Highlights



Table of contents

About Investment Trends 4

Methodology and scope 5

Investor concern levels 6

Capital gains expectations 7

Online broking market size 8

Impact of reduced settlement cycle 9

Contacting potential brokers 10

International shares 11

International exposure 12

Investment instruments familiarity 13

CFD market size 14

CFD trader satisfaction 15

Education for CFD trading 16

Smartphone usage 17

Survey Highlights



About Investment Trends

Investment Trends is a specialist research organisation which provides new

business insights and decision support information to many leading financial

services organisations. We combine analytical rigour and strategic thinking

with the most advanced market research and statistical techniques to help our

clients gain competitive advantage.

Investment Trends is headed by Mark Johnston. Mark has been a leading

industry analyst in the brokerage, CFD, FX and wealth management industry

since 1999.

Investment Trends was started in Australia and is now a multi-national

research organisation servicing clients in Australia, Asia, Europe and the US.

Our work is focused on helping clients answer three fundamental questions:

1. How does the market currently work?

2. How is the market evolving?

3. How do I improve business outcomes:

• Acquire more customers

• Retain more existing customers

• Increase revenue per customer

• Prioritise technology and process investments

Investment Trends’ clients include many of the leading banks, investment

platform providers, online brokers, FX and CFD providers, as well as major

industry regulators.

Survey Highlights



Methodology and scope

The 2015 First Half Australia Trading Behaviour Survey examines the trading

behaviour of Australian online investors and traders. The report is based on a

detailed online survey of Australian online investors concluded in June 2015.

A total of 15,024 valid responses to the survey were received after data

cleaning and de-duplication.

Survey Highlights



Investor concern levels

Investor concern levels remained steady

during the first half of the year

Share investors’ sentiment remained stable during the first half of 2015,

despite the bull market run in Q1 and subsequent correction triggered by

worries over China and Greece. The average concern level hovered between

6.0 and 6.2 (out of 10) during the six months to June 2015.

2Copyright 2015 Investment Trends Pty Ltd. 2015 First Half Australia Trading Behaviour Survey. Confidential. Investment Trends internal use only. Reproduction prohibited.

Concern level vs All OrdinariesAmong share traders

6.1

6.2

6.0

6.2

5.9

6.1

5.7

5.4

5.8

5.6

6.0

5.8

6.36.4

6.2

6.3

5.9

6.6

6.5

6.8

6.4

6.7

7.1

7.47.3

6.9

6.5

6.9

6.3

7.4

3,000

3,500

4,000

4,500

5,000

5,500

6,000

6,500

Apr-0

8

Jul-0

8

Oct-08

Jan-

09

Apr-0

9

Jul-0

9

Oct-09

Jan-

10

Apr-1

0

Jul-1

0

Oct-10

Jan-

11

Apr-1

1

Jul-1

1

Oct-11

Jan-

12

Apr-1

2

Jul-1

2

Oct-12

Jan-

13

Apr-1

3

Jul-1

3

Oct-13

Jan-

14

Apr-1

4

Jul-1

4

Oct-14

Jan-

15

Apr-1

5

All

Ord

inar

ies

4

4.5

5

5.5

6

6.5

7

7.5

8

8.5

Ave

rag

e co

nce

rn le

vel

All Ordinaries Index (LHS) Average concern level among investors in Australia (RHS)

Investor concern levels have not been materially affected by the recent bull market and correction

Question wording:

How concerned are you with the current state of the world’s financial markets? (Please rate how

concerned you are, where 0 is not at all concerned and 10 is extremely concerned)

Source: June 2015 Investor Intentions Index Report

June

-15

Survey Highlights



Capital gains expectations

In June 2015, Australian investors expected an annual

return of 3% from the share market on average

In the first half of 2015, average return expectations (excluding dividends) on

stocks were back to tracking actual market performance after being

disconnected from the growth of the ALL ORDS index from mid 2013.

Whilst capital gains expectations reached 6% in February 2015, they were back

to 3% at the time the survey was conducted.


Return expectations excluding dividends vs All OrdinariesAmong share traders

3%3%

4%

4%

6%

13%

8%

7%

4%4%

3%

2%3%

5%

4%3%

4%

3%

4%

5%

7%

8%

6%

5% 5%

6%

7%

6%

5%

6%

5%

6%

5%

6%

4%4%

3%

4%

2%

3%

3,000

3,400

3,800

4,200

4,600

5,000

5,400

5,800

Nov-0

9

Jan-

10

Mar

-10

May

-10

Jul-1

0

Sep-1

0

Nov-1

0

Jan-

11

Mar

-11

May

-11

Jul-1

1

Sep-1

1

Nov-1

1

Jan-

12

Mar

-12

May

-12

Jul-1

2

Sep-1

2

Nov-1

2

Jan-

13

Mar

-13

May

-13

Jul-1

3

Sep-1

3

Nov-1

3

Jan-

14

Mar

-14

May

-14

Jul-1

4

Sep-1

4

Nov-1

4

Jan-

15

Mar

-15

May

-15

All

Ord

inar

ies

0%

2%

4%

6%

8%

10%

12%

14%

Ave

rag

e re

turn

exp

ecta

tio

n (

excl

ud

ing

div

iden

ds)

All Ordinaries Index (weekly close) Average return expectation for next 12 months (excluding dividends)

Capital gains expectations are back to tracking market performance, but remain stubbornly low

Question wording:

What is your expectation for the Australian stock market

over the next 12 months (excluding dividends)?

Source: June 2015 Investor Intentions Index Report

Survey Highlights



Online broking market size

Online share investor numbers grew from 595,000 in

November 2014 to 620,000 in June 2015

The number of active share investors (those who placed at least one online

trade through an Australian broker in the preceding 12 months) has tracked

upwards since June 2013.

In the seven months to June 2015, the active investor population grew by 4%

pts from 595,000 in November 2014 to 620,000 in June 2015.


* Figures for 12 months to May 2010

The number of online investors increased by 4%, with 620,000 Australian investors placing at least one online share trade in the 12 months to June 2015

Number of share investors (in thousands) (Traded shares within the last 12 months)

510

600650

610 610 630 615550 530

585 585 595 620

0

100

200

300

400

500

600

700

Sep-08 Jun-09 May-10 Dec-10 May-11 Dec-11 May-12 Dec-12 Jun-13 Dec-13 Jun-14 Nov-14 Jun-15

4%

*

Survey Highlights



Reduced settlement cycle

Most traders say the reduced settlement cycle from T+3 to

T+2 would not affect their trading

The majority (76%) of current online investors said the proposed reduced

settlement cycle would not impact their level of trading at all.

9% of frequent traders would trade less often, while only 5% would increase

their trading frequency further as a result of the change.


Q126 How do you expect the proposed reduced settlement cycle from T+3 to T+2 will affect your level of trading? (Recoded from open-text responses)

Among those who selected their main broker due to availability of credit

9%

5%

7%

78%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Reduce trading frequency, lesstime to transfer fund

Increase trading frequency,quicker turnaround

Need to transfer morefunds/more often

Don't know

No effect

All current online investors [n=326] Frequent traders [n=59]

More than three out of four (76%) current online investors said the reduced settlement cycle from T+3 to T+2 would not affect their trading

I will trade less as I do not like holding too much cash in cash account which is not government guaranteed and pays extremely low interest

I think it will be excellent giving you the ability to do more trades, settlement in less time

Survey Highlights



Contacting potential brokers

Investors are more likely to contact their next broker during

account opening than before opening an account

Online traders who have used their current broker for less than 2 years are

more likely to have made contact during account opening process rather than

prior to making the decision to open an account. 48% of those traders

contacted their broker before opening the account, while 64% of them did so

during the account opening process.

Phone is the most popular method for online traders to contact their brokers.

22% of online broking clients contacted the broker they currently use via

phone before opening account, whilst 31% of them made such contact via

phone during the account opening process.


Online traders are more likely to contact their broker during the account opening process rather than before making the decision to open one

Q120 Did you contact [your main online broker] before opening your trading a/c, and if so, how? Among those who have used their broker for less than 2 years [n=2305]

18%26%

22%

31%8%

6%

41%

28%

3%

9% 6%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Before opening the account During the account opening process

I don't remember

Other

I didn't contact them

In person at a branch

Via social media

Via phone

Via email

Survey Highlights



International shares

Diversification is the most common reason

for trading international shares

Current online investors who hold international shares most often trade the

asset class for diversification (66%, up 7% from 2014).

Compared to previous years, more online investors are trading international

shares because they expect a better market performance from overseas

markets (25%, up from 19% in 2013).


Q163 Why do you trade international shares? (Multiple responses permitted) Among current online investors who hold international shares

0% 10% 20% 30% 40% 50% 60% 70%

Diversification

I think the Australian dollar willdepreciate

Access to sectorsunderrepresented in Australia

I hold company shares*

I think developed overseasmarkets will perform better

I know certain o/s companieswill do particularly well

Overseas background

I think emerging overseasmarkets will perform better

Other

June 2013 [n=980] Jun 2014 [n=1225] Jun 2015 [n=1486]

More online investors are trading international shares because they expect overseas markets to perform better

Survey Highlights



International exposure

The US is the most desired market to gain international

exposure for Australian online investors

Australian investors who want access to international shares most often point

to the US (56%), Europe (35%) and the UK (29%) as being the most desired

markets they would like exposure to.

Frequent traders are relatively more likely to ask for exposure to China (34%),

India (13%) and Canada (9%), with China being their second most desired

overseas market.


Q137 Which specific overseas markets would you like to have access to? (Recoded from open-text responses) Among current online investors who would like

access to overseas markets

53%

28%

27%

34%

20%

13%

12%

9%

13%

9%

4%

0% 10% 20% 30% 40% 50% 60% 70%

USA

Europe

UK

China

Asia

Hong Kong

Japan

Singapore

India

Germany

Canada

Other

Don't know

All current online investors [n=611] Frequent traders [n=89]

Those who asked for access to international shares indicated they would prefer exposure to the US, Europe and UK. Frequent traders were more likely to be

interested in Chinese, Indian and Canadian stocks

Survey Highlights



Familiarity with investment instruments

More online investors are familiar with FX trading

Post Swiss Franc crisis, 70% of online investors say they are familiar with FX

trading (up from 61% in November 2014). 55% (up from 45%) are familiar with

ETFs and 38% (up from 36%) are familiar with CFDs. Only 14% know about

binary options (up from 9%).


Q3 How familiar would you say you are with the following instruments? Among current online investors [Jun 2015: n=9968; Nov 2014: n=6527]

20% 20%10%

3%

50%

35%

28%

11%

29%

39%

50%

52%

6%12%

34%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

FX ETFs CFDs Binary options

Never heardof it

Not familiar

Somewhatfamiliar

Veryfamiliar

A larger proportion of online investors report being familiar with FX (70%, up from 61% in November 2014). 38% are familiar with CFDs

Background represents Nov 2014 results

Survey Highlights



CFD market size

The Australian CFD market expanded

by 2% pts in the last 12 months

As at June 2015, 43,000 people placed at least one CFD trade in the preceding

12 month period, up 2% pts year on year.

Spikes in volatility in the past year have sustained the growth for the second

year running.


The number of active Australian CFD traders continued to increase slightly, edging closer to 2012 levels

Market sizing: Current traders (traded within last 12 months)

9,000

31,000

26,000

32,000

39,00041,000

44,00041,000 42,000 43000

Sep 2005 Apr 2007 Aug 2008 May 2009 May 2010 May 2011 May 2012 Jun 2013 Jun 2014 Jun 2015

+2% +2%

Survey Highlights



CFD trader satisfaction

CFD traders were more satisfied than a year ago

CFD traders reported being more satisfied with most service elements

measured compared to a year ago. Their overall composite satisfaction score

was 77%, up from 70% in 2014.

Trading ideas and strategies, research tools, smartphone/tablet platform/app,

platform features, risk management, ease of transferring funds and charting

increased the most in satisfaction ratings compared to 2014.


Composite satisfaction score^: change 2014 to 2015Industry average

55%

61%

72%

63%

72%

70%

72%

72%

66%

62%

76%

74%

63%

70%

63%

70%

58%

63%

74%

65%

74%

72%

73%

73%

66%

63%

77%

74%

63%

70%

63%

77%

67% 69%

2%

2%

2%

2%

2%

2%

2%

1%

1%

1%

1%

1%

0%

0%

0%

0%

7%

100% 80% 60% 40% 20% 0% 20% 40% 60% 80% 100%

Trading ideas and strategies

Research tools

Smartphone/tablet platform/app

Platform features

Risk management

Ease of transferring funds

Charting

Customer service

Platform reliability

Value for money

Spreads

Platform easy to use

Execution speed

Education materials/programs

Consistency of filling trades at price quoted

Commissions

Overall

-50% -40% -30% -20% -10% 0% 10% 20% 30% 40% 50%

2014 2015 Change

^ Very good=100%, Good=67%, Average=50%, Poor=17%, Very poor=0%

Industry-wide, CFD traders were more satisfied than a year ago with most service elements

Survey Highlights



Education for CFD trading

Next wave CFD traders would like access to introductory

information on how CFDs work

Current CFD traders who say education materials/programs is important when

choosing a provider most often point to platform features (18%), trading ideas

(17%) and FX trading (17%).

Next wave traders (those who intend to start trading CFDs within the next 12

months) are relatively more likely to look for basic information on how CFDs

work (27%), market insights (20%) and option trading (14%).


Q89 On which topics would you like to receive education materials from main provider? (Recoded from open-text responses)

Among those who said education materials/programs is important

16%13%

17%20%

6%9%

5%27%

3%

14%

9%

11%

0% 10% 20% 30% 40% 50%

Platform featuresTrading ideas/strategies

FX tradingMarket research/insights

Technical analysisThe risks of CFDs

Comparison of different marketsHow CFDs work

Fundamental analysisComparison of different investment products

Order typesOption tradingShare trading

ETF tradingComparison of different CFD providers

Costs of CFDsOther

Don't knowNone

All current CFD traders [n=80] Next wave CFD traders [n=64]

Next wave CFD traders who said education materials are important would like more information on how CFDs work (27%) and market research/insights (20%)

Survey Highlights



Smartphone usage

75% of Australian CFD traders use a mobile device for

trading versus 60% among online share traders

Among seven key leveraged trading markets studied by Investment Trends,

Singapore is the country with highest penetration of mobile devices (88%)

among CFD/FX traders, while Hong Kong has the highest proportion of ‘mobile’

share investors (83%).

Australian investors have a moderate level of smartphone usage, with 75% of

CFD traders using a mobile device in relation to their trading and 60% of online

share investors doing so.


Proportion of traders who use their smartphone/tablet in the context of trading: International comparison

88% 87% 87%76% 75% 73% 71% 71% 70% 69% 69%

83% 81%

60% 60%53%

48% 46%

8% 7%13%

9%6% 10% 11% 16%

12% 13% 9%

15%10%

12% 11%

11%15%

12%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Sing.CFD(Sep2014)

Sing.FX

(Sep2014)

HKlev.

products(Jan 2015)

UK CFD (Sep 2014)

Aus. CFD (Jun

2015)

UK spread betting (Sep 2014)

UK FX

(Sep 2014)

US FX

(May 2014)

Aus. FX

(Dec 2014)

Ger.CFD/FX

(April 2015)

France CFD/FX

(Apr 2015)

HK (Jan

2015)

Sing. (Sep 2014)

US (May 2014)

Aus. (Jun 2015)

UK (Sep 2014)

Ger. (April 2015)

France (Apr 2015)

Leveraged product traders Online stockbroking investors

Currently use a mobile device for trading Intend to start using a mobile device for trading within 12 months

Australian investors and CFD traders had a moderate level of smartphone usage among the seven key leveraged trading markets studied by Investment Trends

Proportion of online investors and traders who use their smartphone/tablet in the context of trading:

Survey Highlights



Investment Trends Pty Limited

ABN: 14 107 485 656

ACN: 107 485 656

Suite 2102, Goldfields House

1 Alfred Street

SYDNEY NSW 2000

Australia

Phone: +61 (0) 2 8248 8000

Fax: +61 (0) 2 8248 8088

E: [email protected]

www.investmenttrends.com.au

© Copyright 2015 Investment Trends Pty Limited. All rights reserved.

The material in this study (“Highlights from the 2015 First Half Australia

Trading Behaviour Survey”) contains proprietary information including

copyright material and trademarks, the rights to which must be respected.

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Except for any rights under any legislation in Australia or any other relevant

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