Market volatility is scaring off Australian online share traders

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The number of people actively trading shares online in Australia is falling as market volatility increases, according to the First Half 2016 Australia Online Broking Report by Investment Trends.

The study of online investors’ attitudes and investing habits, based on a survey of more than 15,000, found that retail investors expect returns to be smaller from the share market.

In the six months to May, the number of Australia’s investors placing at least one online share trade in the last 12 months fell to 605,000, down from 635,000 in November 2015.

“Global market volatility continues to weigh down on investors’ outlook for domestic equities,” says Dr Irene Guiamatsia, a senior analyst at Investment Trends.

“As a result the healthy client inflows that the industry continues to witness were not enough to compensate for those who decided to halt their trading activity in the past six months.”

Investor expectations are falling. The level of capital growth online investors expect from domestic equities has followed a see-saw pattern over the past few months, making it increasingly difficult to forecast their next move.

Average return expectations, excluding dividends, was 1% in January but this rebounded to 4% off the back of the May market rally.

However, expectations have fallen again since the federal election, with investors now expecting a return of just 2%.

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