David Wilson takes us deep into the land of the
Internet stock trader.
In the past five years Australians have taken to share investment like ducks to water, more so than any other nation on earth. Not surprisingly, the Internet is underpinning this move, both by spawnin
In the past five years Australians have taken to share investment like ducks to water, more so than any other nation on earth. Not surprisingly, the Internet is underpinning this move, both by spawning some lucrative high-technology stocks, and by allowing a new wave of investors to trade shares online through discount stockbrokers whose only overhead is a Web page.
Research by the Australian Stock Exchange in January found that the large floats in the past five years stemming from government deregulation of the telecommunications and utilities sectors, and demutualisations of insurance companies, have left 54 per cent of Australian adults holding shares, more per capita than any other country.
Some investors have just dipped their toes in stock market waters, biting off tiny chunks of floats of Telstra, AMP, and the Commonwealth Bank, while others have plunged headfirst into the choppy waters of Internet and high-tech stocks, hoping to catch the share price wave of investor fervour. Australias latest share ownership rate is double that from the ASXs 1997 survey, and the second slice of Telstra shares hitting the market late last year, plus another 141 new floats during 1999, have fuelled investors interest in share investment. The ratio places us well above America and the UK. But the simultaneous widespread adoption of the Internet by Australians - more than 30 per cent of Australians have Internet access - has given rise to a growing industry of online stockbrokers.
Australias four major banks now all offer online broking services as an extension of their other financial products - the last to jump aboard was the National Australia Bank in mid-February - and other banks such as St George, HSBC and Macquarie have followed suit. Internet brokers E*Trade Australia, Charles Schwab and TD Waterhouse have brought tested models from the United States to Australia. Others, such as Reckons Quick.Broker, Lend Leases YourProsperity and Austocks Webstock have instigated moves into online trading by companies not traditionally aligned so closely with the stockbroking industry.
Online trading has a lot of full service brokers running scared, seeking out niche markets to replace thousands of small investors who have migrated to Web-based alternatives. One in ten ASX trades are now conducted over the net, and although these trades may be small in volume compared with those of institutional investors, the proportion of Web trades seems set
to grow.
This article appeared in the April, 2000 issue of PC Authority.
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