Q+A: Beyond SpaceX: where Australian investors are putting their money
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What triggered the surge in international investing among Australians?
Welcome to Fear and Greed Q&A, where we ask and answer questions about business, investing, economics, politics and more. I'm Sean Aylmer. The listing of SpaceX on Wall Street has attracted an extraordinary amount of interest from retail investors. And while those who got on board in the days after... The IPO might be feeling a little bruised right now. For many, it will be their first taste of investing in markets beyond the ASX. ComSec served as the lead Australian retail broker and saw a surge in international trading accounts. It begs the question, what else are all these new global investors looking at? Now, remember, this is general information only. You should always seek advice tailored to your circumstances before making investment decisions.
Stephen Daglian is market analyst at ComSec. Steve, welcome to Fear and Greed Q&A.
Thanks for having me, Sean.
SpaceX, was that the most interest you've seen in an offshore float?
It was. Certainly, I mean, we had a record 37,000 international accounts that were opened ahead of the offer. That was a requirement to be able to apply for this. Customers submitted more than 28,000 IPO applications through CompSec at the time. So, For context, that's over four times higher than any previous IPO that retail investors have actually had access to through that platform. So the highest level of retail participation. And I think it just highlights, amongst other things, growing importance of retail investors in major capital market transactions. And from what we've seen, retail investors do have a tendency to be long-term holders of companies that they deem having an exciting future and deliver value as well.
Now, we're not saying SpaceX is good or bad. That's not the point of the conversation. I'm just interested, though, why do you think SpaceX grabbed retail investors' attention?
I think there are a number of reasons why it did. I mean, it's been one of the, firstly, the major market stories for months, even outside of markets. We know that the US and Iran and the Middle East conflict's been receiving a lot of attention. We've got the World Cup going on at the moment as well, inflation, interest rate expectations, and then the SpaceX listing was one of them. the brand recognition, the fact it's the world's largest IPO, the size of the company itself. We obviously have a lot of love for the Aussie market, but we're tiny. 2% of the global market, the US is roughly 60%. And I think an important point is this is in an industry that Aussie retail investors typically don't get much access to via IPOs.
I'm historically getting very limited access to like big blockbuster brands. floats like this. Um, and I think it's, it's been really an area space, a space, so to speak, I guess that's underrepresented on the Aussie market. So there is that desire, I think, to diversify, uh, and the composition of our market does also play a part. So, um, obviously Australia is very resource and financials heavy. It's about 60, a little over 60% of our share market. Um, I checked yesterday, that's mining energy and financials tech. Um, is currently our second smallest sector. So it's 2% of our market. And when you look at communication services, it's 3% of our market. So that's the second and third smallest sectors. And if we compare that to the US where roughly half of the S&P 500 is made up of now
tech and communication services. And I mentioned communication services because that includes names, of course, like Alphabet and Netflix and Meta. So very different markets. And I think this has just been seen as an opportunity to get access to something that they don't usually.
So away from SpaceX, what are retail investors in Australia interested in? Is it firstly geography? Is it mostly Wall Street?
Why did SpaceX attract so much attention from retail investors?
And then within Wall Street, where are they putting their money?
Yeah, so if I could just start with Australia, because we've seen different trends across both. So over here locally, we've got healthcare, banking, resources mostly, and that typically is the case.
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