How Covid mobility restrictions modified the population of investors in Italian stock markets

TL;DR

This study examines how Covid-19 mobility restrictions altered the composition and behavior of investors in the Italian stock market, revealing a surge of new, younger, and more skilled investors during the pandemic.

Contribution

It provides novel insights into how pandemic-induced restrictions led to a regime change in investor demographics and trading behavior in Italy.

Findings

Surge of about 185,000 new investors during lockdown

New investors were younger and more male on average

New investors demonstrated higher trading skill based on gross P&L

Abstract

This paper investigates how Covid mobility restrictions impacted the population of investors of the Italian stock market. The analysis tracks the trading activity of individual investors in Italian stocks in the period January 2019-September 2021, investigating how their composition and the trading activity changed around the Covid-19 lockdown period (March 9 - May 19, 2020) and more generally in the period of the pandemic. The results pinpoint that the lockdown restriction was accompanied by a surge in interest toward stock market, as testified by the trading volume by households. Given the generically falling prices during the lockdown, the households, which are typically contrarian, were net buyers, even if less than expected from their trading activity in 2019. This can be explained by the arrival, during the lockdown, of a group of about 185k new investors (i.e. which had never traded since January 2019) which were on average ten year younger and with a larger fraction of males than the pre-lockdown investors. By looking at the gross P&L, there is clear evidence that these new investors were more skilled in trading. There are thus indications that the lockdown, and more generally the Covid pandemic, created a sort of regime change in the population of financial investors.