Released in 2013, the American application Robinhood (Robin Hood in French) caused a stir in Western countries, seeking to convert “ordinary people” into private investment. Since then, local equivalents have sprung up from Nigeria to India, to attract 20-30-year-olds.
“Honestly I don’t think about college anymore. Now it’s bazaar, bazaar, bazaar”, recognizes Ishan Srivastava, a student from New Delhi, who started the “trade” at the end of December.
At age 20, Ishan Srivastava invested in a handful of Indian apps (including Zerodha or Upstox) and aimed to diversify his portfolio enough to annuitize by age 45.
In India, the investment revolution has been largely facilitated by the emergence of electronic bank accounts, which are easy to open online and can hold financial securities, stocks or bonds. But there is a similar craze for trading apps in many other countries including Nigeria.
Banks are less and less attractive
Renowned for its dynamism, Lagos, the economic capital, is now suffering from rapid inflation of the national currency, the naira.
As a result, Nigerian youths have flocked to Trove and RiseVest, local apps that provide access to the American market, seen as a way to protect their savings until the situation improves.
“I have the possibility to keep my money in the bank, but every month, this option is becoming less and less attractive”, speculates 23-year-old Dahunsi Oyedele.
After losing his job as a journalist after the pandemic, Dahunsi paid his rent for a few months by trading cryptocurrency in Wedel.
And he is far from the only person who has turned to speculation during the Covid-19 crisis. A combination of mass unemployment, lockdowns, and underutilization of savings for the fortunate, has created jobs around the world.
In the US alone, more than 10 million new investors entered the market in the first half of 2021, says JMP Securities.
Some of them were attracted in January by the buzz around the chain of video game stores “GameStop”, whose prices rose as traders on the social network jumped on hedge funds.
And the new converts are getting younger. The average age of Americans in Robinhood is 31; In India, Upstox claims that 80% of its users are 35 or younger, the same for Nigerian app Bamboo (83%).
To further reduce entry barriers, these applications allow the purchase of fractions of securities, for example allowing payment for only a portion of an Amazon action instead of the entire title (more than 2,500 euros today). Finally, some propose multiplying gains (and losses) through a leverage mechanism.
Flirt with risk?
But if they democratize money and often promise zero commissions, trading apps also soap the boards of inexperienced investors, some experts fear.
In the US, the market watchdog (SEC) is investigating whether these companies are encouraging trading in an irresponsible way, through multiple reminders and the impression that investing is a game.
Its British equivalent (FCA) warned in March that young investors, many of them women, and people from minorities in the UK stood to lose the most.