Yewande Odumosu works as a consultant in Nigeria’s technology sector, so when Africa’s largest e-commerce company, Jumia Group, went public in 2019, she wanted to buy in. But Jumia shares were out of reach. The company didn’t list in Nigeria, its biggest market, but on the New York Stock Exchange, and Odumosu had to watch as its share price jumped from $14.50 to more than $40 two weeks later. “I was sad because I wished I could participate,” she told Rest of World, “but there was no way.”
A year later, as the coronavirus began to spread worldwide, Odumosu was trading. Speculating that it would be a good year for tech stocks, she used a Nigerian stock trading app called Bamboo to bet on Jumia, as well as the videoconferencing platform Zoom. “I invested in Zoom just before Covid hit and I knew it was going to go up,” Odumosu said. “I was right.”
Over the past few years, retail stock trading apps have sprung up all around the world in the slipstream of the U.S. market leader Robinhood, which brought millions of retail investors into stock markets with easy-to-use interfaces, emoji-heavy marketing targeting Gen Z and millennial users, and innovations such as fractional trading, which allow customers to buy small slices of stocks. The platforms are supported by a thriving internet subculture of influencers and forums where small traders swap tips and boost stocks. But while these platforms look almost identical worldwide, they’ve been adopted in wholly different ways in different places, reflecting the underlying anxieties and needs of individual markets — from currency hedges in Nigeria to hype-driven FOMO — fear of missing out — in India and middle-class aspirations in Mexico.
“These apps made it so that people from any part of the world can enter the market,” Andrés Moreno Jaramillo, a Bogotá-based financial expert, told Rest of World. “No matter how much money they have.”
Compared to its more ostentatious brethren like r/WallStreetBets, the subreddit Mexico Financiero is a bastion of prudence. There is the occasional meme and questionable recommendation for penny stocks — shares in small, poorly-valued companies that can rise and fall quickly as investors pile in and out — but for the most part, the forum is filled with educational posts on how to invest, along with explainers of various platforms, equities, and news events. With more than 16,000 members, it is a carefully curated space for Mexicans to responsibly discuss their financial futures.
The relative sanity of r/MexicoFinanciero is thanks, in large part, to its sole moderator, who oversees the subreddit under the handle of u/perro_dinero, or Money Dog. In the real world, Perro Dinero is a 29-year-old software engineer named David Ojeda López living in Culiacán, Sinaloa, just east of Mexico’s Pacific Coast.
Although he played around with the peer-lending site Prestadero, his first real investment was in December 2019, when he bought shares in an exchange-traded fund investing in the S&P 500 to learn how equity markets worked. “That’s when I first started to call myself an ‘investor,’” he told Rest of World. He started blogging about his experiences, and ultimately took over the r/MexicoFinanciero subreddit after its original moderator left.
Ojeda said he does think of himself as privileged, but that he didn’t get any financial education until his mid-20s. What he knows, he taught himself. His aspirations are modest: He wants to be able to travel a couple of times a year, something that isn’t possible on his salary.
In that, he’s typical. Around a third of the Mexican population lives below the World Bank definition of middle class, and 4.7 million people fell out of the middle class across Latin America during the first year of the pandemic. At the end of 2020, the poverty rate exploded to reach 44% of the population. In 2022, inflation grew to its highest level in over 20 years. Many of r/MexicoFinanciero’s members are like Ojeda, investing a little extra on the side, trying to use the markets to keep in touch with an increasingly fragile middle-class lifestyle.
Ojeda uses a few different platforms: Cetesdirecto for buying government bonds (CETES, or Certificados de la Tesorería de la Federación, are bonds) and Bitso to hold a little cryptocurrency. For stocks, he uses GBM, or Grupo Bursátil Mexicano. A relative dinosaur in the Mexican finance space, GBM was founded in 1978 as a traditional brokerage service before transitioning into a digital platform in 2011. Since then, it’s made it much easier to sign up for an account and reduced the minimum investment size from 1 million pesos (around $48,000) to just 100 pesos (around $5). GBM CEO Pedro De Garay told Rest of World that just four years ago, there were only 200,000 investment accounts in the whole country. As of today, GBM has opened three million accounts, although only one million are actively funded.
GBM’s shift towards digital happened the same year that Mexico’s first major challenger to traditional brokerages, Flink, launched in the country. When it went live in July 2020, the company had half a million people on a waiting list to join its platform. Today, it has 1.6 million customers, according to its own data. More than 90% of them are first-time investors. The minimum starting investment is 30 Mexican pesos, about $1.50, though today the average trade is around $40, and the company only allows users to trade on U.S. markets, Sergio Jiménez, the company’s co-founder, told Rest of World.
Jiménez was careful to say that his company isn’t the Robinhood of Latin America. They don’t allow risky day trading, for example, unless users have a minimum of $6,000 in their accounts. “If we provide the opportunity to play in the markets, people will lose money, and we don’t want that, because we’re responsible for that.”
Jiménez said that when users join the platform, they tend to start with assets of just $1 or $2, which they tend to grow slowly.
That’s why Ojeda, the Money Dog, insists on trying to keep his forum and investments aboveboard and rational. “We have this philosophy here that investments are to build up your wealth, not to play around with,” he said. “I do what I can to keep the sanity, but it’s difficult.”
Until the market crash of March 2020, Abhilash Jain never felt the need for a trading account. Like many middle-class Indians, his father had stuck to investing in gold and fixed deposits, and discouraged him from investing in riskier markets.
“Coming from a middle-class family, your parents always say ‘Don’t do this! This is gambling! Everything will get destroyed!’” Jain told Rest of World.
But then he saw his roommate Vikas Tiwari “buy the dip” in March 2020, after the Indian stock market crashed. Tiwari, who had been actively trading since 2019 on the brokerages Zerodha and Angel Broking, invested in Tata Motors, a major automotive manufacturer, when its shares were at 100 rupees ($1.30), and watched them bounce to 400 rupees. After seeing how much his friend was making, Jain “started believing this is an actual, real thing,” he said.
He didn’t start trading until December 2021, after getting married and moving from Delhi to Bengaluru, India. Stuck at home due to the pandemic, Jain finally set up a stock trading account with one of India’s fastest-growing online investment platforms, the brokerage Groww. For a month after beginning to trade, Jain restricted his investment to 5,000 rupees (around $65). “I was not taking risks,” Jain said. “I was trying to figure out how to sell, how to buy, what is [a] stop-loss, and all those things. And then when I started getting confidence, I started investing more.” By February, Jain had invested 200,000 rupees (around $2,600).
Like many others using trading apps in India, Jain was drawn in by promises of quick riches. The hype around retail trading has been intense, and new traders say the FOMO was often what compelled them to start accounts.
Hyderabad-based Bhargava Kalwa, who started trading in May 2020, said he made a 150% profit during the pandemic. “There is no bigger addiction than that,” he said. “You see stocks moving 15% in a day, 20% in a day — you clearly feel like you don’t want your money to sit idle in the bank. Rather, put it here and take advantage of the volatility.”
Kalwa found he was churning his portfolio a lot, buying and selling shares to try to keep up with the hype. “You could see gaining money or losing money on your screen in a split second,” he said. “This is like Instagram short stories — you are done with one video, and then immediately something relevant shows up. You are hooked to these short stories.” He’s recently stepped off the rollercoaster and is trying to hold stocks for longer periods.
In the first three months of this year, about 2.6 million electronic trading accounts were opened every month in India, according to the Securities and Exchange Board of India. The rising markets have also created a boom in penny stocks, which tend not to be covered by brokerage analysts or by the media, meaning that investing in them is often more like gambling than stock trading. Millions of rookie traders who entered the U.S. markets through brokerage Robinhood have caused penny stock bubbles.
“People get attracted to lower-value stocks without understanding the lower value in [the] stock market doesn’t mean cheap,” Nithin Kamath, the founder of India’s largest brokerage Zerodha, told Rest of World.
Jain gets his stock tips from YouTube and Twitter. His portfolio is mostly made up of larger blue-chip stocks, such as Tata Motors, Tata Power, Wipro, and chemical manufacturing giant Deepak Nitrite, but 30% of his holdings are smaller companies, with share prices closer to 20 rupees (around $0.25). When he spoke to Rest of World in late February 2022, he was marginally in the red, but was confident of a big rebound in March. Four days later, global markets crashed as Russia invaded Ukraine. An inquiry on his portfolio’s health solicited a meme of Putin’s actions scaring people stiff.
While in the West, amateur retail trading has long been associated with high risks and fragile rewards, there are places where it looks a lot less dangerous than the alternatives.
Richmond Bassey, CEO and co-founder of Nigerian trading app Bamboo, decided to launch his company in January 2020 after getting a notification from his bank, he told Rest of World. “My bank deposit had earned 3% interest,” Bassey told Rest of World, “meaning, I basically lost money, since inflation was 18% at the time.”
It’s a common complaint among Nigerians that their money never goes as far as it did the previous year. The value of the naira relative to the dollar has more than halved in value since 2015. Many people have turned to too-good-to-be-true investments, including Ponzi schemes, to try to keep ahead. Since 2020, several schemes have collapsed, losing investors hundreds of millions of dollars, including the MBA Forex scam, which promised users 15% profits every 30 days. At the time of its collapse in early 2021, 125,397 people had deposited $411 million (171 billion naira) with its operator, Maxwell Chizi Odum, according to the Central Bank of Nigeria. The Economic and Financial Crimes Commission, Nigeria’s anti-fraud agency, estimates the figure is much higher at $512 million (213 billion naira).
For Nigerian traders, American stock markets offer relative stability and access to assets denominated in U.S. dollars, as well as liquidity, opportunities to invest in new companies, and more diversification in their portfolios.
While the U.S. recorded nearly 1,000 IPOs last year, the Nigerian Stock Exchange has managed only six new stock offerings since 2008.
Storing value isn’t the only reason for investing. The performance of U.S. markets in 2020 “created the image of the stock market as a money-making machine,” 23-year-old Obinna Onwuchekwa, who started investing with Bamboo in 2020 with $100 to spend, told Rest of World. “That buzz, not just local inflation, was actually what pushed me into stock trading,” Obinna shared.
The volume of traders from Nigeria is unlikely to ever move the markets in the U.S.
Ajoke Kashiro, a 25-year-old cloud computing engineer, has a total of $500 invested, mainly in dividend-paying stocks. She said that her fractional holding in Coca-Cola is so small that when she started getting quarterly investor reports, “I laughed because my stake was so little.”
But the point isn’t to get rich, it’s to keep her head above water and get out of the domestic financial system. “Retail trading platforms provide Nigerians with some sort of freedom,” Kashiro said.