More than half of millennials see themselves as global citizens, so when they invest, they don’t confine themselves to just one country. That’s especially true when it comes to putting their money to work in China.
Thirteen Chinese companies made it into the Apex Millennial 100 in the second quarter of 2019. That’s just one of several noteworthy findings on how this generation is interacting with Wall Street.
As a partner for many of the financial industry’s leading online investing platforms, we at Apex Clearing get an inside look into the behaviors of millions of investors, including Millennials. To find out what they’re investing in, we recently dug into our proprietary data on stock positions in self-directed accounts. We compiled our major insights in the Next Investor Outlook, our quarterly report on these investors.
Seeking stocks that fit their global perspective
Millennial investing habits correspond with their belief that belonging to one country is an outdated concept and that social media has played a huge role in uniting the world. So when Chinese companies like Baidu, Tencent, and Alibaba that have been around long enough to become big and well known extend their reach into social media, it seems natural for Millennials to include those companies in their portfolios. Shares of Alibaba and Tencent have climbed over the last 18 months, while Baidu shares have slumped.
Members of this generation are also willing to stray from the beaten path and purchase shares of less prominent companies, like video websites Bilibili and iQiyi. Those moves may reflect both their beliefs in both a more connected world and China’s increasing economic power. Both stocks are up since their public debuts in 2018.
More willing than other generations to invest in IPOs
In addition, Millennials are directing their investments into what they see as promising initial public offerings, or IPOs. They’re more willing to put their money into these companies than other generations, but they’re also selective. Public darlings like Pinterest, Chewy, Zoom Video and The RealReal didn’t draw enough interest from Millennials to make it into their top 100 investments.
Instead, they invested in companies that promise to disrupt sectors like transportation and agriculture, taking stakes in Lyft, Uber, and plant-based burger company Beyond Meat. At the same time, their interests in international markets and a more connected world came into play with investments like those in Mmtec, a China-based company that provides access to U.S. financial markets. They also scooped up shares of China’s Nio, an electric car maker, and Newater Technology, a wastewater treatment company.
Why does it matter?
In recent years, millennials overtook Baby Boomers as the largest U.S. generation, with 75.4 million members. Boomers declined to 74.9 million as the members of that generation, which peaked at about 79 million in 1999, died off. Two key facts make Millennials an important demographic for the financial industry:
- They’re moving into their prime earning years, giving them more money to spend and invest. Millennials make up half the global workforce and are expected to account for 75 percent of workers in the United States by 2025.
- Second, they’re about to come into some serious cash. Millennials in North America will inherit more than $30 trillion by 2030, according to an Accenture report.
Opportunities for financial services providers
For money management or financial advisory firms interested in working with millennials, our findings suggest several opportunities.
- When introducing concepts like diversification and asset allocation, take a global view. Discuss how international stocks, bonds, and alternatives fit into a balanced portfolio.
- Adapt investment strategies that provide exposure to both China and to promising startups to ensure that Millennials’ interests and motivations are being addressed in their investments.
For more details about our proprietary data, the full findings and what they mean for financial services providers, download the full report here.
