ASIC cracks down on finfluencers to protect young investors


If you type the words 'stock market' into your browser, you will literally get millions of hits, some of which have good, valid information, while others are misleading and in some cases fraught with danger.

While the incidences of misleading information and education in the financial space is not new, social media giants have made it very easy for anyone to become a financial influencer.

Remember, the more people consume content the more money the social media giants make, and given their lack of care or action, the Australian Securities Investment Commission (ASIC) has increasingly been targeting this area in order to protect Australians.

Finfluencers to be more heavily regulated by ASIC.

This is because the way investors now access information has changed significantly and, as such, ASIC recently announced it would tighten the restraints on those who talk about money and investing if they are unlicensed. In essence, they are putting social media financial influencers or 'finfluencers' on notice that if they cross the line into financial advice, they will face heavy fines or prison.

Unfortunately, many of these finfluencers have very little understanding of the law when it relates to financial advice and are walking a fine line - ASIC is monitoring this space and they will get caught. While some finfluencers do provide good information, there are too many providing misleading information.

With 33% of 18 to 21-year-olds following at least one financial influencer in 2021, according to ASIC, the potential for serious damage to the younger generation is high.

In the last few years with the lockdowns due to COVID, there has been a significant rise in finfluencers and younger generations have been getting into the stock market, as well as other investments without the proper knowledge or advice. Sadly, this is causing a lot of damage, so I support ASIC cracking down in this area and I urge social media giants to do the same.

The best and worst performing sectors this week

The best performing sectors include Healthcare and Utilities up more than 3% followed by Industrials, which is up more than 1%. The worst performing sectors include Information Technology and Materials, as they are both down more than 2% followed by Communication Services, which is just in the red for the week.

The best performers in the S&P/ASX top 100 stocks include Ramsey Healthcare up more than 28% after a consortium of investors that include KKR launched a takeover bid for the company. Challenger was also up more than 8% while Brambles was up more than 7%. The worst performing stocks include Block down under 7% followed by Evolution Mining and Iluka Resources, which are both down under 6% followed by BHP and Rio Tinto down under 3%.

What's next for the Australian stock market?

Our market has had another short trading week after Easter and we will have another one next week with Anzac day, so it's not surprising that the market has remained relatively subdued recently. Once again, the All Ordinaries Index started the week on a positive note only to exhibit weakness mid-week.

Regular readers know that I have been expecting some weakness partly because the market is trading within a few per cent of its all-time high.

Typically two things can occur at an all-time high; one is that price accelerates and breaks through the high quite quickly or we see resistance to price breaking through the high and the market trading down or sideways for a period, which is more common.

You will remember I mentioned that the highest close on the Australian market was back in August last year and that this level was significant because to date it has not been broken. Given this and the fact the All Ordinaries Index is yet to break above the all-time high suggests that the big of town are being cautious right now. This indecision could mean that my earlier analysis of the market falling to as low as 7,600 points before rising again is still likely.

For now, I recommend continuing to play the wait and see game until the Australian stock market confirms its direction. As I mentioned last week, recent history has shown that anything is possible in our market and that we need to expect the unexpected.

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Dale Gillham is chief investment analyst at Wealth Within Limited (AFSL 226347). He also serves as the head trainer at the Wealth Within Institute (RTO 21917). He has more than three decades of experience in the investment industry, and is the author of How to Beat the Managed Funds by 20%, Dale's qualifications include an Advanced Diploma and a Diploma of Share Trading and Investment. He co-hosts the Talking Wealth Podcast, and his work has appeared in The Australian Financial Review, New York Business Journal, Wall Street Select and more.