Reddit-fueled retail shopping frenzy spreads to Europe By Reuters

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© Reuters. FILE PHOTO: Reddit logos are shown in this illustration

By Lawrence White and Anna Irrera LONDON (Reuters) – The US retail equities trading phenomenon fueled by the WallStreetBets Reddit forum is fueling a boom in copycat trading in Europe, banks and brokerages said. Younger investors in Britain and other countries are quickly joining online trading platforms and spending more on stocks at traditional brokerages, hoping to copy Americans who bet on stocks like GameStop (NYSE: ) and AMC Entertainment (NYSE 🙂 during this year’s frenzy. Britain-based online trading platform Freetrade registered more than 160,000 clients in January, topping 500,000 in total, thanks to hype surrounding Reddit’s so-called recovery actions, Freetrade told Reuters. “When investors are so excited about the potential of a particular stock or asset class, the story can sometimes go from the world of financial news to the mainstream,” said Adam Dodds, CEO of Freetrade. Reddit’s stock mania has galvanized a retail boom that was already underway in Europe in 2020, as bored home-bound punters saving extra money tried to cash in on market volatility and new easy-to-use apps. use they were given the means. The growing interest in investing in stocks is also due to macroeconomic factors in continental Europe, including soaring interest rates, high house prices and inadequate pension systems, said Nick Bortot, co-CEO of the digital broker based in Amsterdam BUX. The Reddit-driven stock craze in the United States has ignited touch paper, he said. “In the last few weeks since GameStop and others made the headlines, we have added a few thousand customers a day, two to three times our average,” he said. Traditional brokers have also benefited. Barclays (LON 🙂 clients’ credit and debit card spending at brokerages grew more than 300% year-on-year in January, the British bank said, continuing a growth boom that began last year mainly among the group of age 18 to 29 years. LATE TO THE PARTY Regulators and some of the brokers themselves have warned that with the new fad comes risks, especially for those who are late and looking for easy profits. Some investors in the US made a lot of money in the early days of the social media-fueled frenzy, which pitted amateur traders against Wall Street hedge funds that had piled up big bets against the fortunes of unwanted stocks like GameStop. Many of those who were late to the party have lost a lot as GameStop shares plunged to $ 51 last week after hitting $ 483 the previous week, and U.S. Secretary of the Treasury Janet Yellen has said that regulators need to watch closely. European Union regulators have also said they may intervene after a surge in online equity trading by retail investors since restrictions were introduced to address the COVID-19 pandemic. Many investors in Europe caught up in the hype are more focused on US stocks than on companies closer to home, banking and brokerage sources said. “We are seeing an increase in retail investors outside of the US opening stock accounts. Most of them are household names and with a virtual disruption of other forms of gambling due to the pandemic, some retail bettors are betting every time. more for US stocks, “said the chief operating officer at a US bank in London. Younger foreign investors are ignoring domestic stocks in favor of the US because it offers both Reddit recovery stocks and many of the world-renowned tech companies such as Apple Inc (NASDAQ :), Amazon (NASDAQ 🙂 and Tesla (NASDAQ :). Freetrade says that orders from its UK retail clients are split around 55% for US-listed securities and 45% for UK-listed. Lewis Harding, a 22-year-old Freetrade user from Leeds, said he has a mix of US and British stocks in his portfolio, including Facebook Inc (NASDAQ :), Bank of America Corp (NYSE :), British American Tobacco (NYSE) 🙂 Plc and Unilever (NYSE 🙂 Plc. He made his first investment in 2017, buying shares in Aphria (NASDAQ 🙂 Inc, one of the largest cannabis companies in the world. The exchange was successful and he managed to buy his first car with the proceeds. Since then, he has focused on larger, more stable companies and says he educates himself by reading investment books, watching YouTube videos, and listening to podcasts. He expressed enthusiasm for what has happened in the markets in recent weeks. “It‘s been pretty amazing what’s been going on,” Harding said. “I didn’t buy GameStop, but I looked from the sidelines and it was crazy.”