Retail traders account for 10pc of US stock trading volume: Morgan Stanley

LONDON: Retail investors currently account for roughly 10% of daily trading volume on the Russell 3000, the broadest US stocks index, after peaking at 15% in September as lockdown boredom and extra savings triggered interest in stock markets, Morgan Stanley said on Wednesday.

The retail frenzy from last summer carried over into 2021 with so-called "meme stocks" like GameStop and AMC Entertainment rapidly soaring more than 1,000 percent, leaving professional traders perplexed.

The average daily trading volume on the Russell 3000 index over the last five days was $380 billion, according to Refinitiv data, meaning individual traders contributed around $38 billion a day. European retail investors on the other hand make up a 5% share of total market volume, Euronext recently said.

Morgan Stanley says the phenomenon has prompted many questions from its clients about how to effectively estimate retail activity.

"We find that retail investors tend to prefer companies in sectors they are likely to be familiar with as consumers, such as consumer discretionary, communication services, and technology," the US investment bank said in a note.