Uberization of exchange trade: How technologies have become key drivers for stock market
The appearance of online services for retail investors in Kazakhstan has given powerful momentum to the country’s stock market. Thanks to this digital revolution, many have obtained easy access to investing.
For example, in 2022, the amount of buy and sell on the Kazakhstan Stock Exchange (KASE) rose by 50% and reached $571.2 billion. This figure is almost threefold higher than the country’s GDP ($189.9 billion in 2022). Last year, the number of individual accounts increased 1.6-fold. More than 513,000 Kazakhstan’s citizens (6% of the economically active population) have stock exchange accounts.
Retail investors have already been playing a significant role in day-to-day trades. For instance, during its IPO in December 2022, KazMunayGas (KMG) raised $334 million. Funds the national oil company raised on KASE accounted for 89% of this sum. Moreover, 51% of this money was provided by individuals, 40.2% by institutional investors and 8.8% by Kazakhstani companies. The so-called People’s IPO of the KMG attracted 130,000 applications, a record high for such events in Kazakhstan. For comparison, in 2012 the IPO of KazTransOil reported 34,000 applications from individuals, while the IPO of KEGOC in 2014 reported merely 42,000 applications. If you wonder why this happened, the answer is simple: at the time, there were no online services for retail investors.
Who approaches the stock market and why
New technologies have changed the portrait of an average stock market participant. Anyone can open a stock exchange account remotely these days. Those who are now entering the market have no professional background or special tools for trading. They are just regular people who consider exchange trade as another alternative to banking deposits, investments in real estate or life insurance.
Mobile and desktop investment apps have rapidly gained popularity given that they have simplified the process of investment portfolio management.
According to our data, the vast majority of investing app users are young people aged 25-40. Usually, they allocate about $174 to $185 a month for exchange trade. Generation Y wants an online product to be convenient, work fast and be stable. They do not think too much about specific brands or companies.
Development of technologies
There are many different brokers who offer online solutions. Commercial banks also run such apps, so you can open an investment account, put money in it and buy securities within a bank’s ecosystem. You can also use your investment gains for purchasing a ticket to the cinema or buying home appliances by using a single mobile app. With the help of this app, the bank’s clients have unlimited access to all securities available on stock exchanges in Kazakhstan.
Usually, banks follow their own tariff policies, so it is always a good idea to conduct research and compare available offers before you actually open an investment account and buy any securities. Newcomers have to be cautious: if you see an offer with a small fee, just try buying some cheap stocks in order to understand how the app is working.
Online investment services have constantly evolved. For example, we are expecting the appearance of new, very useful online services. One will provide access to the global stock market, while the other will help file income tax.
All these specialized apps have found themselves amid very tough competition with each other. However, this contest for functionality is gradually switching to the fight for just two fundamental features: speed and usability.
Banking ecosystems that host these investment services also pursue a way to expand their ability to keep a client inside one ecosystem. For example, they want a client to be able to transfer his money from an investment account to a banking deposit or vice versa with no extra fee. Almost all actors in the world seek this smooth user experience and banking apps in Kazakhstan aren’t an exception.
On the other hand, broader access to the stock market needs more financial literacy from regular users. This is why many services launch interactive training courses for budding investors.
In conclusion, I’d like to say that the uberization of the stock market is full of benefits not only for banks or retail investors who got a useful tool to manage their portfolios. This process is of benefit to all Kazakhstani companies that are going to raise funds from individuals on the stock market. The government also gets benefits from this due to the fast development of the real economy and more revenue to the state budget.