Stock trading from home skyrockets - COVID gives boost to JSE online platform
Jamaican stock market investors are trading more online, with volumes already surpassing the levels seen in all of 2019, due in part to lockdown measures against the coronavirus.
It shows that while slow, there is incremental transition to online trading away from the traditional method of calling or messaging a broker to execute buy and sell orders.
“When you look at 2019, there was big growth in the volumes and the value traded, but we are up year to date July, and you would see because of COVID, many persons have been able to effectively achieve trading through the online trading platform,” said JSE Group Managing Director Marlene Street Forrest at the annual general meeting of the Jamaica Sock Exchange Limited, which was livestreamed on Thursday from the exchange’s Harbour Street, Kingston base.
The JSE’s platform known as Jtraderpro was launched in 2015, allowing persons to trade from their computers. The JSE has hinted at plans to launch a mobile app for Jtraderpro in the near future.
Investors on the online platform now trade around 122 stocks and securities. That is up from 106 a year earlier.
In terms of trading frequency, already in 2020 - from January to July - online volumes hit 1.6 billion units, compared with 1.1 billion for the entire 2019.
“We are looking at ensuring that we advance the exchange’s growth through technology. Sometimes we put in technology, and it takes a little while for this technology to move, and this is demonstrated with the online trading platform,” Street Forrest said.
The value of trades online between January and July at $5.9 billion represents 17 per cent of the $30.1 billion of total market transactions, according to data supplied by Street Forrest on Friday.
Street Forrest expects online activity to continue growing, even after the worst of the pandemic passes, in part because the online platform favours young investors, and also, more brokers are entering the space.
Investors under 35 are heavily attracted to the online platform, accounting for 60 per cent of all the 17,664 registered online traders, according to data from the JSE. Just 314 online traders are 65 years and older.
“Investors have indicated that they find it convenient, and they don’t have to wait on their brokers,” Street Forrest said, adding that the addition of new brokers on the platform – Proven Wealth and GK Capital in 2019 and Stocks & Securities in 2020 – was fuelling new registrations.
“More persons are learning about the platform, and as we add new and younger investors, this route appeals to them,” she said.
For the overall market, comprising online and traditional trades, the total volumes traded have declined “as you would have expected,” said Street Forrest.
The growth in the online segment, which she noted as bucking the trend, comes amid a steep decline in market activity and sell-offs that have pushed the market into bear territory.
At market close on Friday, stocks were still 27 per cent off, year to date.
Shortly after the detection of the COVID-19 coronavirus in Jamaica, the JSE Combined Index slumped, hitting bottom on March 25, when the market closed at 337,506 points, down 33 per cent from its high of 508,131 on January 2.
At the end of July, the market closed at 368,679 points, giving up some of the gains seen in June when the Combined Index closed at 380,975 points.
“The index has declined, but it is resilient,” Street Forrest asserted at the AGM.
The JSE expects the market to eventually return to pre-COVID-19 levels, saying that it would benefit from new services set for “2020 and beyond”. These include the trading of private bonds and government securities, which is being developed in collaboration with the Bank of Jamaica.
The JSE also wants to facilitate direct-market access, allowing retail or individual investors to trade directly with institutions.
The exchange had previously announced plans to introduce short-selling, which allows investors to profit from declining stocks, but JSE Chairman Julian Mair said at the meeting that shorting was unlikely to be implemented while the market was depressed.
Mair said nobody expected that 2020 would unleash a deadly pandemic and protests about racial inequity, issues that have galvanised the world. He remains optimistic, however, about the outlook for the JSE.
“My optimism in these uncertain times is not just for our country, but also for our beloved JSE. It must serve as a critical component in our economy in our society, creating growth … to motivate and build enterprise,” he said.
In 2018, the exchange delivered on its promise to introduce the Nasdaq platform, launched the Jamaica Social Stock Exchange, widened online trading, and reduced the minimum trading of shares from 100 to one unit.
Having twice led the world in market performance in the past five years, the JSE closed among the top 10 last year. Since then, the COVID-19 pandemic has taken a heavy toll, pushing the JSE to the sixth worst performer worldwide at half-year ending June.