Stock Market Participation by Retail Investors is Rising in Brazil

Individual investors are participating more in the Brazilian equity market according to an article by Claus Born at Franklin Templeton. He notes that low-interest rate is driving more people looking for yield to the equities. Currently the short-term interest rate, the selic, is at just 2% relative to about 14% four years ago.

So it is not just in the US where people are indirectly forced to invest in stocks with interest on savings earning practically 0%. In Brazil also low-interest rate is leading more savers to invest in the stock market.

From the article:

In this low-yield environment, many of them have started turning to the equity market. The number of trading accounts has been increasing exponentially. Brazil’s stock exchange has seen a surge from around 600,000 accounts in 2008-2017 to nearly three million accounts today.² (See chart below)

Is this the peak of the trend? In our view, probably not. With a population of more than 210 million inhabitants, still less than 1.5% of Brazilians are currently engaged in the stock market. However, new investors are discovering the potential opportunities. Not only are more women investing in Brazil’s market, up from 22% in 2018 to 25% today, but it is attracting growing interest among the younger generations of both genders.³ More than 70% of investors are aged 46 and under, representing more than 25% of value invested in the stock market.⁴

Notes:

2. Source: Brasil, Bolsa, Balcão (B3). Number of individual trading accounts in Brazil, as of July 30, 2020.

3. Source: B3, as of August 2020.

4. Ibid.