Online share trader numbers increase

The number of Australians actively trading shares online has increased, despite market returns expectations having collapsed in the second half of 2011, according to Investment Trends.

Concern about the situation in the global financial markets has returned to levels observed in 2008 - the depth of the global financial crisis, according to Investment Trends senior analyst, Pawel Rokicki.

Rokicki added that capital gains expectations have also collapsed in the second half of 2011.

"Expected market returns for the following 12 months (excluding dividends) fell to 13 per cent in 2009, to 8 per cent a year later, and a mere 2 per cent in December 2011," Rokicki said. "[However], the vast majority of share traders see Australian shares as undervalued".

But the Investment Trends survey revealed some 630,000 traded at least once in 2011 (an increase of 20,000), but this figure remains below the recent peak of 650,000 recorded in May 2010.

Brokers associated with the big four banks continue to dominate the space, with Commsec retaining its 50 per cent market share. E*TRADE is in second place, followed by Westpac Online Investing and NAB OnLine Trading respectively.

Traders mostly rely on market analysts in their decisions on which stocks to buy and when to sell them, while around half also relies on business and economic news.

"Traders are becoming more sophisticated in their investment decisions," said Rokicki. "The typical online share investor gathers information from more than three different sources before placing a trade, and the number is growing."

The Investment Trends Second Half 2011 Australia Online Broking Report was based on a survey of around 7,000 active share traders, conducted in November and December.