CommSec urges investor caution

By Grace Ormsby

May 20 2020
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One of Australia’s biggest investment platforms is strongly encouraging anyone thinking about buying shares in the current crisis to make sure they gather their research from a variety of sources and diversify their investments.

In a conversation with nestegg, a spokesperson of CommSec said the platform is “pleasingly seeing many [investors] maintain a sensible and a diversified portfolio approach” since the COVID-19 crisis began.

“This is particularly important for the months ahead, as volatility is likely to continue.”

Stating that there has never been a more important time to get information from a variety of sources and implement diversification, the spokesperson said it helps investors “manage their investments in a balanced way which also helps to smooth out the volatility we’ve seen in the market”.

“Regardless of how they choose to invest, all retail investors, and particularly new investors, should be cautious at this time.”

Noting increased activity on the CommSec platform, the spokesperson said the stockbroking site has recently seen “a large response by customers, both new and existing ones, as well as a lot of customers that haven’t traded for some time”.

The interest has been attributed both to investors seeking to protect current portfolios and those who are looking for new opportunities.

March, in particular, saw a huge spike in share trading activity, with the spokesperson saying: “For example, with CommSec Pocket, which is a more balanced way for less experienced investors to enter the market, we opened twice as many new accounts from March to February — a 99 per cent increase.”

And while they’ve continued to see new investors enter the market, numbers did drop by 20 per cent over April from the March highs.

According to the spokesperson, where investors have been putting their money has also changed as a result of COVID-19, with a “big change” in the types of stocks traded pre-COVID-19 compared to the middle of the crisis.

So, who’s buying what?

While stocks such as Treasury Wines Estate (TWE) and Zoono Group (ZNO) had record trading volumes across February, these dropped off as investors flooded to blue-chip stocks that included major banks and mining.

Qantas (QAN) was also in the top five buys for April — which the spokesperson flagged as “interesting given the impact on the airline industry from COVID-19”.

And while Afterpay (APT) has been in the top five stocks for selling since a baseline was recorded in February pre-COVID-19, CommSec has commented that this is “unsurprising as their share price declined from ~$39 down to $8.90”.

Incidentally, its share price has rocketed back up to around $31.30, despite still being one of the top five sold stocks on the platform.

About the author

Grace Ormsby

Grace is a journalist on Momentum Media's nestegg. She enjoys being able to provide easy to digest information and practical tips for Australians with regard to their wealth, as well as having a platform on which to engage leading experts and commentators and leverage their insight.

About the author

Grace Ormsby

Grace is a journalist on Momentum Media's nestegg. She enjoys being able to provide easy to digest information and practical tips for Australians with regard to their wealth, as well as having a platform on which to engage leading experts and commentators and leverage their insight.

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