France’s AMF survey shows stock traders are leaving the market

A study conducted by the Autorité des Marchés Financiers (AMF) showed that the number of active retail investors in the stock market has declined by one third in Q3 2022.

The eighth edition of the AMF’s Active Retail Investor Dashboard saw a lesser inflow of new private investors, taking the overall number of individuals with brokerage accounts to nearly half of its yearly peak over the last three months.

In the quarter just ended, 600,000 traders placed at least one order to buy or sell shares. With the stock market well on its way to its worst quarter since 2008, the figure was down by 35 percent from the previous quarter. Judging by the prior years’ metrics, the curiosity over stock prices has returned back to its pre-pandemic levels.

“The uncertainties weighing on the markets are reflected in the lower activity of individual investors. With the markets declining for the third consecutive quarter, retail investors appear to have taken a wait-and-see approach and held their positions,” the AMF said.

Other highlights show that equity buyers fell by 19 percent to 485,000, its lowest level since the third quarter of 2020. In particular, the AMF survey showed that 39,000 had never placed a stock market order before or had been inactive since January 2018. In a further market downturn, the number of stock sellers fell sharply at a level significantly below the number of buyers, by 43 percent, to 362,000.

A previous AMF’s report showed that retail investors’ activity wrapped up a record year in 2021, with 1.6 million accounts carrying out at least one transaction on shares, a 19% increase compared with a year earlier.

Retail trading volumes also more than doubled in the last two years compared  to the turnover observed in 2018 and 2019. This came as market volatility and Covid lockdowns created a unique opportunity for regular investors to play the stock market’s unprecedented rally.

The flow of new investors remained steady but seems to have levelled off at around 50,000 per quarter, the AMF notes.

These annual volumes match those achieved in 2020 when many French turned to trading as the central banks slashed rates to record lows, making banks’ deposits less attractive.

A big part of this growth was driven by first-time investors. However, the AMF found that these new investors are not just young people, they are also those elder but discovering investing for the first time.

Retail investing had been on the rise even before the Covid-19 crisis hit the world. But the novel virus gave just the push required to send young investors to the financial markets.