Stocks rock as turnover surges A RECORD-BREAKING week on Wall Street has turbocharged retail investor interest in the Australian sharemarket, after five years of bad news for equities. If you want a visceral measure of how the Australian sharemarket is going, daily turnover is almost as good a guide as the market index, and we all know that has performed well. It's now showing that serious retail interest is taking off in selected stocks in our sharemarket. It's a rule of thumb that local market participants (we used to call them brokers) start to make a profit if the value of shares traded on the ASX exceeds $6 billion a day, and the number of smiley days has doubled in the past 12 months. Specifically, there have been 17 days in this financial year so far with ASX turnover in excess of $6bn, compared with eight for the previous equivalent period. Bell Potter estimates that the 2011-12 financial year saw an average of $4.65bn a day, climbing to $5bn in the current half. The trend is certainly up, with turnover having jumped from a dismal $3.65bn average in January, despite all the optimism in the market, to $4.833bn in February. So we're not in a boom yet, but it's clear that after five years of exchanging horror stories at dinner parties, retail investors are finally wading back into the local equity market. There's a fair bit of stick as well as carrot, in that sub-3 per cent returns from low-interest term deposits have caused despair among older savers: returns are simply not enough to keep capital intact. The inevitable targets have been stocks paying fully franked dividends because, for over 60s, the franking will turn a yield of 4.5 per cent into an effective yield of almost 6.5 per cent, because no tax is payable on it. That's more than twice what you'll get at the bank, plus there's a better than even chance of capital appreciation that could very easily double the annual return. News that the US Dow Jones Industrial Average is now above where it was before the financial crisis certainly attracted a lot of attention, too: if equities are so bad, why are they doing so well in the country where it all went wrong, the US? What's more, our market will still have to climb by just over 30 per cent to get back up to our equivalent high, set on November 12, 2007, of 6684.4. It's not quite comparing apples with apples, given how different the constituent companies in those national indices are. But even a pessimist would concede that our market has underperformed by comparison. Meaning? There's room for our share prices to go up, a point accepted by economist Stephen Koukoulas of Market Economics. "A number of key leading indicators have started turning up in the past couple of months, such as consumer sentiment, house prices and job adverts, plus margin lending has definitely resumed," he said. Anecdotal evidence from around the dealing rooms has it that they are busier than they have been for five years, partly due to the fact that many investors felt they'd missed a market move and wanted to get a piece of the action. However, the real business of the sharemarket, raising money for new floats and existing companies, has still to show any significant signs of life. We haven't seen many new floats seeking more than $20 million because the big ones take a while to organise. But like the sun rising in the morning, you can be sure they will come.