Australian investors are known to have a penchant for investing in ASX shares.
Part of that is because we're familiar with them. Part of that is because we like to support the home team. And part of that is because investing internationally used to be more expensive and more complicated.
But all of that is changing.
According to Saxo Bank, only 2 of the most popular shares among its Aussie clients in the first quarter of 2021 were ASX shares. The other 3 were listed in the United States.
What were the 5 most popular shares for Saxo's Aussie clients?
Earlier today Saxo revealed the 5 most popular shares for its Australian client base were…drum roll please…
- Tesla Inc (NASDAQ: TSLA)
- Westpac Banking Corp (ASX: WBC)
- Zip Co Ltd (ASX: Z1P)
- GameStop Corp (NYSE: GME)
- AMC Entertainment Holdings Inc (NYSE: AMC)
Commenting on investor interest, Saxo Market's Head of Equity, Peter Garnry said:
Global equities continued the upward momentum in the first quarter amid increased volatility, which was especially evident in several the heavily shorted stocks in the beginning of the year such as GameStop and AMC. Many of these names continue to attract retail interest although some of the hype seems to have faded.
Garnry urged investors to proceed with extreme care when trading in these types of shares with "unprecedented high volatility".
Tesla takes the pole position
Pointing to Tesla, the most popular share among Saxo's Aussie clients in the first quarter of this year, Garnry said:
Tesla remains a popular stock with Saxo Bank's clients and the increasing competition is somewhat at odds with the current valuation of Tesla. But the company continues to surprise to the upside with Q1 delivery numbers at 170,000 vehicles, which was above analysts' estimates… However, Tesla's free cash flow generation remains stretched given the rise in competition which will be the long-term theme for investors to watch.
Saxo's recommendations
Looking at the list of top 5 most popular shares for its Australian clients, it would appear few are taking heed of Saxo's own advice, instead chasing after the shares making big news for their big gains.
However, Garnry cautions:
Our view remains that during the incoming reflationary environment investors should increase their exposure to the commodity sector and high-quality companies with low debt leverage. The rising interest rates are likely to create a downward adjustment of equity valuations in the most speculative growth segments such as bubble stocks, e-commerce, gaming, green transformation, and next-generation medicine stocks.
He adds that the investment bank believes shares in cyclical sectors will outperform as the global economy recovers and inflation makes itself known.
