Ongoing investor education initiatives, falling costs and the regular introduction of new products and features are encouraging increasing numbers of South Africans to open online share trading accounts.
So says Richard Seddon, head of online share trading at Standard Bank, which he says runs SA's largest online share trading platform, accounting for around 25% of all share investors.
Seddon says the bank has seen tremendous growth since launching its online trading platform in 1999, with annual compound growth of around 80% over the past eight years. He believes there is still plenty of scope for online trading growth in a country where direct share ownership is still low.
In 2004, Standard Bank conducted research that revealed few South Africans invested directly in shares. He says this is largely due to their limited understanding of the share market, expensive transaction costs, and the perception that a lot of capital or disposable income was needed to justify opening a broking account.
Seddon says the bank studied the Australian market, which has the highest direct ownership of shares in the world, with about 55% of adults, or 5.7 million people, having invested in shares directly. In contrast, he says less than 150 000 South Africans have online trading accounts.
"Apart from the Australian government privatising some state assets at discounts to their market value, we found that major education drives by a couple of brokers brought about the massive growth that has taken place in share trading and direct share ownership in that country."
Trading training
He says the bank has implemented a range of education programmes. Courses include a free "getting started in shares" course run regularly in Johannesburg, Pretoria, Cape Town and Durban for the general public. It runs several more specialised courses covering a variety of investment topics for its clients.
Seddon says the bank wanted to educate its clients, empowering them to become better and more successful investors.
He also says the bank has begun several initiatives, aimed at stimulating direct investment in shares. He cites Auto Share Invest, as an example. This online tool enables investors to invest as little as R500 a month in 26 large capitalisation shares, allowing investors to build up a portfolio over time and then move it over to the online trading platform.
"Our aim is to stimulate investors into becoming direct and active shareholders in companies, rather than only investors in unit trusts which are a valuable but more passive investment vehicle."
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