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Hargreaves Lansdown boosted by surge in young people trading stocks

A graph displaying the Apple stock price. Photo: Jaap Arriens/Sipa USA
A graph displaying the Apple stock price. Photo: Jaap Arriens/Sipa USA

Investment platform Hargreaves Lansdown (HL.L) saw a surge of new clients signing up in recent months, as more and more young people get into investing.

The retail investment business said 84,000 new customers had signed up to its platform in the six months to 31 December. Net new business was up 40% to £3.2bn ($4.4bn) in the first half of its 2021 financial year.

Chief executive Chris Hill said the performance had been driven by younger customers signing up to the platform and trading stocks. Equity trading volumes were up 123%.

“As our client numbers continue to grow, we are finding that younger people are taking a greater interest in investing for the future, with the average age of our clients continuing to fall,” Hill said.

“COVID-19 has underpinned the importance of financial resilience and Hargreaves Lansdown is well placed to support clients with their saving and investment needs across their lifetimes.”

READ MORE: Amateur investors chase profits during the pandemic

47% of new sign-ups in the period were aged between 30 and 54. Hill said the pandemic and lockdowns meant “many have found the time and seen the need to prioritise household savings which has enabled and led them to invest for the first time”.

The surge in new sign-ups helped Hargreaves’ half-year revenue jump 16% to £299.5m. Pre-tax profit rose 10% to £188.4m.

Hill said it was the “strongest calendar period ever” and the business hiked its interim dividend by 6% to 11.9p.

The last year has seen a boom in retail investment around the world as people stuck at home due to COVID-19 have put money into stocks.

This wave of amateur investment has made headlines over the last week as traders have used Reddit to coordinate “attacks” on hedge funds short-selling stocks such as GameStop (GME) and cinema chain AMC (AMC). It has led to wild swings in the stocks, with daily gains of more than 100% not unusual.

READ MORE: The GameStop short squeeze was 'the grand awakening': expert

Price action has been more muted in the UK but names such as Pearson (PSON.L) and Cineworld (CINE.L) have also seen unusually large moves over the last week.

“Throughout the pandemic we have seen a number of extremely busy days,” Hill said when asked about the recent market activity.

“Probably before the pandemic we were seeing around 20,000 trades a day. That average now has probably doubled to more like 40,000

“We’ve seen days where we’ve seen 100,000+ trades. There is no doubt that we’ve been a lot busier from a trading volume perspective, both in the UK and with US stocks.”

Hill said volumes in January had been “similar to other lockdown periods with strong dealing volumes, significant client engagement and robust net new business and net new client numbers”.

The explosion in market value of stocks like GameStop has prompted concerns that many investors may end up losing large amounts of money when prices normalise. The concerns have prompted calls for greater regulatory scrutiny of the space and some trading platforms such as Robinhood and Trading 212 temporarily suspended trading last week.

Hill declined to comment on regulation of the space and said Hargreaves Lansdown’s focus was on educating its clients.

“We’re about long term investing,” he said. “Whilst people look to trade in the short-term, what we’re doing is supporting clients to invest for the long-term and engaging with them. That’s our focus.

“What we’re here to do is to support our clients and make sure they understand the risks that are out there.”

He said the outlook beyond April was largely uncertain but Hargreaves would continue to focus on investing in its digital product.

“I wish to thank my colleagues for their hard work throughout this incredibly difficult time. Their dedication has delivered a period of very strong growth with record new clients and increased market share against the backdrop of the pandemic and the political uncertainty of the US elections and Brexit.”

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