Retail traders account for 10% of U.S. stock trading volume - Morgan Stanley (updated)

KOSS

30/06/2021 11:53

(Adds dollar value of trades, Europe data)
    By Thyagaraju Adinarayan
    LONDON, June 30 (Reuters) - Retail investors currently
account for roughly 10% of daily trading volume on the Russell
3000, the broadest U.S. stocks index, after peaking at 15% in
September as lockdown boredom and extra savings triggered
interest in stock markets, Morgan Stanley said on Wednesday.
    The retail frenzy from last summer carried over into 2021
with so-called "meme stocks" like GameStop  GME.N  and AMC
Entertainment  AMC.N  rapidly soaring more than 1,000 percent,
leaving professional traders perplexed.
    The average daily trading volume on the Russell 3000 index
 .RUA  over the last five days was $380 billion, according to
Refinitiv data, meaning individual traders contributed around
$38 billion a day.
    European retail investors on the other hand make up a 5%
share of total market volume, Euronext recently said.
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    Morgan Stanley says the phenomenon has prompted many
questions from its clients about how to effectively estimate
retail activity.
    "We find that retail investors tend to prefer companies in
sectors they are likely to be familiar with as consumers, such
as consumer discretionary, communication services, and
technology," the U.S. investment bank said in a note.
    Applying its own methodologies, Morgan Stanley found that
over the five-year period from July 2016 to June 2021, stocks
with high retail participation continued to outperform stocks
with low retail participation over the subsequent one month.
    The bank's number crunching also highlighted that these
traders have bifurcated quality preference, with greatest
activity in high quality and junk names.
    Meta Material, formerly Torchlight Energy, was the latest
name to see huge speculative bets by small individual traders.
Clover Health Investments  CLOV.O  and Koss Corp  KOSS.O  were
other names that made headlines on a retail trading frenzy.
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 (Reporting by Thyagaraju Adinarayan; Editing by Kirsten
Donovan)
 ((thyagaraju.adinarayan@tr.com; +44 (0) 20 7536 7471; Reuters
Messaging: thyagaraju.adinarayan.thomsonreuters.com@reuters.net;
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