The Kiwi Wealth-incubated US share-trading platform, Hatch, could crack open more global stock markets or other investment types after the successful launch of an American Depositary Receipt (ADR) suite last week.
Kristen Lunman, Hatch general manager, the positive response to the ADR offer showed there was latent demand in NZ for direct access to a wide range of investment opportunities.
“We’re thinking about whether to open up to more global markets or even other [non-share] investments,” she said. “It’s important that we create an ecosystem of interesting products.”
The platform added 250 ADRs – or parcels of US bank-owned shares in offshore entities repackaged as listed ‘negotiable securities’ – covering 35 jurisdictions last week.
Lunman said while big name brands such as Chinese online commerce business, Alibaba, attracted the bulk of early Hatch ADR trades a handful of investors plumped for more exotic companies.
The ADR trading trends reflected general investor behaviour patterns on Hatch where high-profile US-listed companies like Apple or Tesla were attracting the most attention.
Since going live late last year Hatch has traded about $7 million of shares, Lunman said, with most investors apparently using the platform to build buy-and-hold portfolios rather than short-term trading positions.
“Buy-and-hold investors are in the majority,” she said. “On average Hatch investors are trading three-times a month and checking their accounts two-to-three times a day.”
The sharp uptick in share market volatility beginning last December could also have put a lid on trading, Lunman said, as caution prevailed.
Regardless, she said Hatch member numbers were roughly doubling each month off a low base but with high levels of “engagement” from a diverse bunch of investors.
“We’ve been most surprised at the range of investors on Hatch,” Lunman said. “Initially, we were targeting experienced investors but about 60 per cent of our investors claim to be beginners and 30 per cent intermediate.”
This month the platform also signed on its first trust clients, who tend to have larger pools of money to invest than individuals.
She said Hatch was focused on developing a deeper understanding of investor behaviour, for example, by tracking aggregate trading and search trends, and by direct communication.
“We want to know more about why they are engaged investors and understand what their problems are – and to use that information to solve the problems,” Lunman said.
The Kiwi Wealth-owned platform charges clients on a per-trade basis ranging from US$3 for fractional share trades to US$8 for buying or selling full shares. ADR trades also attract an extra impost of 1-3 US cents per deal while the platform includes a 50 basis points fee in currency exchange costs.
While the Hatch process covers US tax obligations, investors need to manage their own NZ tax liabilities. Hatch has outsourced US brokerage duties to New Jersey-based online share trading business, DriveWealth, with Sydney-headquartered firm World First supplying foreign exchange services.