Sun, Nov 07, 2021 page12

• From Nigeria to India, Gen Z uses apps to invest

  • By Nivrita Ganguly / AFP, MUMBAI, India
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  There are a new generation of investors in town. They are young, they get their tips on YouTube, and they are armed with apps that make the stock markets more accessible than ever before.

  US-based Robinhood Markets Inc has made a splash in the West with its mission to open the markets to “everyday people,” but from Nigeria to India, Generation Z are flocking to homegrown equivalents.

  “I don’t really care about my college, to be honest. It’s all market, market and market,” said Delhi student Ishan Srivastava, who began trading in December last year.

  

  College student Ishan Srivastava checks stocks on his computer while trading on apps on his smart phone in Ghaziabad, India.

  Photo: AFP

  Srivastava uses a handful of Indian trading apps from companies including Zerodha and Upstox, and often recevies his financial advice from YouTube. The ambitious 20-year-old hopes to build a diverse investment portfolio and retire by 45.

  In India in particular, the investment revolution has been aided by a boom in “demat” accounts — easy-to-open electronic accounts for holding financial securities, equity or debt.

  However, a similar app-led investment craze is also under way 8,000km away in Nigeria.

  The country’s economic hub Lagos has long been known for its hustle and celebration of success, but the weakness of the naira currency has put extra pressure on young people to make cash as the cost of living has rocketed.

  Nigerians have flocked to local apps such as Trove and Risevest, which allow them to invest in US stocks, widely seen as a means of protecting wealth as the naira nightmare continues.

  “I had the option of putting the money in the bank, but that is looking less attractive by the month,” 23-year-old Dahunsi Oyedele said.

  “Sometimes I put my money in Risevest and get some returns in a week. Imagine getting 1 or 2 percent returns on 100,000 naira [US$244] each week — that’s small, but it means a lot,” Oyedele said.

  For a few months after losing his job as a tech journalist due to the COVID-19 pandemic, Oyedele covered his rent by trading cryptocurrencies.

  He is far from alone in turning to speculation during the COVID-19 crisis.

  In the US alone, more than 10 million new investors entered the markets in the first half of this year, according to, some of them drawn in by social media hype around “meme stocks” like GameStop Corp, JMP Securities LLC said.

  Worldwide, the new arrivals are largely young.

  Robinhood’s median US customer age is 31, while Upstox says more than 80 percent of its users are 35 or under, a figure matched by Nigeria’s Bamboo at 83 percent.

  Trading apps have lowered the barriers to entry for youngsters in part by offering fractional trade. A share in Amazon.com Inc, for instance, is worth more than US$3,000 — unaffordable for the average Generation Z or slightly older millennial. Yet a small fraction of that share might be within reach, particularly on an app that charges zero commission.

  Trading apps might have been hailed as democratizing access to the markets, but critics say they could also make it easier for inexperienced young investors to get into hot water.

  The US Securities and Exchange Commission is probing whether apps are irresponsibly encouraging overtrading using excessive e-mail alerts and by making investment feel like a game.

  The British Financial Conduct Authority in March also said that the new cohort of young investors — who skew in the UK toward being women and from minority backgrounds — have more to lose.

  Nearly two-thirds of the new investors it surveyed said “a significant investment loss would have a fundamental impact on their current or future lifestyle,” the authority found.

  Some young investors have already been burned. Mumbai-based product designer Ali Attarwala is giving trading a break after a bad experience with cryptocurrencies earlier this year.

  “These apps make it easy to buy speculative assets like crypto, but there is still a lot of volatility in these new assets,” the 30-year-old said.

  Srivastava has also had ups and downs, but he sees his losses as part of the learning experience. “When I started, I blew up almost 50 percent of the capital,” he said. “I don’t treat them as my losses, but like education fees.”

  Additional reporting by Segun Olakoyenikan in Lagos and Katy Lee in Paris
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