Eng Thiam Choon, CEO at Tiger Brokers Singapore, wants to make more stock investors out of young people by removing intermediaries and barriers to trading through the use of technology.
Besides charging just 0.08% for trading Singapore stocks, the online brokerage is offering a “no minimum charge promotion” which will run till the end of the year.
Recognising the growing appetite of local investors for shares traded elsewhere other than the Singapore Exchange (SGX), Tiger Brokers has also introduced access to popular exchanges such as New York Stock Exchange, Nasdaq, Hong Kong Exchange and Clearing, and most recently, the Australian Securities Exchange.
That strategy has so far worked well for the young brokerage firm, which lets clients trade via a mobile phone app or through a desktop computer. According to Eng, the Xiaomi-backed Tiger Brokers saw a 126% q-o-q surge in new account openings in 3Q2020, with more than 80% of new users under 45.
Aged between 18 to 24, Generation Z makes up 15% of the company’s current 900,000 customers worldwide.
Figures released by Tiger Brokers on Oct 23 showed 45% of Generation Z investors prefer long-term stocks like Apple, Boeing and Carnival while 35% are invested in REITs and ETFs across the United States, Hong Kong and Singapore.
Another 10% of Generation Z investors have sunk money into high-volatility stocks such as Afterpay, Kodak and Vaccinex while yet another 10% are invested in options.
At home, Generation Z makes up 30% of Tiger Brokers’ customers here, following the launch of the Tiger Trade app in February. For 3Q2020, the most traded stocks by Generation Z here were Tesla, Apple, NIO and MedTech International.
According to Accenture, online investing transactions in Singapore rose by up to 212% after the outbreak of Covid-19, with investors spending 194% more time per session compared to before the pandemic.
In an interview with The Edge Singapore, Eng attributes the surge in new users to the “circuit breaker” lockdown and subsequent working from home measures, which drove new and existing investors to seek out online brokerages.
Eng says the rate of digital adoption will only accelerate in the near future. “In the FinTech world, what we think would take a year or two for people to pick up could take just half a year.”
The Monetary Authority of Singapore (MAS) and SGX defines those in the 18 to 21 age group as “young investors”. This is to prevent them from investing in high leverage products, says Eng.
Eng believes technology will create a more level playing field for investors by offering easier access to information, identifying the needs of individual investors and recommending suitable investment products and strategies.
Grooming the next generation of traders
Prior to leading Tiger Brokers, Eng spent 14 years in the financial sector. He spent 12 of those years at Phillip Futures where, among other things, he helped to oversee the Greater China market.
With his years of experience, Eng says there are excessive costs that can be cut away. Just like how budget airlines offer low or no frills in return for lower fares, the same logic can also be applied to brokerages.
In addition to low trading fees, Eng hopes waivers on charges like the US$2 ($2.70) currency conversion fee will encourage investors to use Tiger Brokers.
“We don’t want our customers to worry about additional fees when they make transactions… We look at how we can remove them to make trading more affordable, while offering better customer experience,” adds Eng.
One reason why mainstay brokerages charge a certain level of fees is because they offer advice on what to trade and research reports written by their own analysts. They also hold client-only seminars and events to deepen engagement.
Tiger Brokers is also reaching out to investors but in a different way. Using digital content like short-form videos and infographics, it hopes to make trading lessons less intimidating for newcomers.
“We try to create an online environment where senior and junior [investors] can all come together and discuss their views on the market,” says Eng.
Rocking the boat
A relatively young player in the online brokerage arena, Tiger Brokers is backed by investors including Chinese technology giant Xiaomi, US-based Interactive Brokers and investment guru Jim Rogers, who, in recent years, has become a prominent investor in Asia.
Xiaomi lends to Tiger Brokers’ credibility, particularly to its digital platforms, says Eng. The two companies also have a “very close relationship” and cooperate beyond just Xiaomi holding an equity stake in his company.
But won’t Interactive Brokers, itself an online brokerage, compete for customers with Tiger Brokers? “Clients will always overlap,” says Eng. “Perhaps some investors may prefer a more Chinese [brokerage] company compared to a Western one.”
Tiger Brokers is also up against a dozen or so brokerages here — more than half of which are either backed by either one of the three big local banks or linked to a large overseas bank or brokerage.
There has also been consolidation within the brokerage industry. In fact, the most recent consolidation involves Eng’s former colleagues at PhillipCapital, which is acquiring the Singapore brokerage operations of RHB.
Nevertheless, Eng remains upbeat on his company’s chances. He is more than aware how crowded the field is here, but he points out that Tiger Brokers is holding its own competing in China too, where there are dozens more rivals and the industry is even more competitive.
In any case, Eng has been able to scale up in less than one year of setting up shop here. Tiger Brokers now has a headcount of 20, with plans to increase the number to 30 in the coming year.
Looking ahead, Eng is optimistic about the untapped potential of would-be investors outside of China. “Our target is the whole Southeast Asia, not just Singapore. Look at our closest neighbours in Malaysia, Thailand, Indonesia; they’re also very well developed. Even Vietnam is starting to pick up.”
In short, Tiger Brokers is only starting to flex its muscles.
