Fortescue Metals Group is on track to break Telstra's long reign as the ASX's most traded stock by volume of shares, according to new data that highlights the volatility in the iron ore sector this year.
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Telstra was the most traded by volume of shares in each of the past five years, but in the first four months of 2015 there has been a change in the market, with data collected by the ASX confirming Fortescue has claimed the top rank.
BT Investment analyst Brenton Saunders said many factors could be influencing the result, but the extreme volatility in iron ore markets was clearly one of them.
"Volatility begets volume and underlying all of that has obviously been what the iron ore price has done for a long time, whereas Telstra has been slightly more steady as she goes, it has had much more of an understandable trend growth, so it has had less need for dramatic change and volatility I suspect," he said.
The change comes despite Telstra having almost four times as many shares on issue as Fortescue.
Fortescue has long been a target for short-sellers, with as much as 12 per cent of Fortescue shares sold short in March, while the most recent data from ASIC suggests more than 10 per cent of the company remains sold short.
Mr Saunders said short-sellers were a factor in the trading data, but not the biggest factor.
"Part of the market volume is short interest, but it's only part of the story. By far and away the largest part of stocks traded in any benchmark institutional stock like this is long-only and the short sellers generally only make up a small component at the margin," he said.
"[Fortescue's] market capitalisation has fallen so anybody that has been trading it has had to trade more shares for the same monetary value."
Fortescue's rise to become the most traded stock on the Australian bourse by volume comes as BHP Billiton's long reign as the most traded stock by value looks set to end.
BHP was the most traded by value in each of the past five years, but data from the first four months of 2015 shows Commonwealth Bank has claimed the mantle.
"The first thing that strikes you is the fact that over that period BHP's market capitalisation has fallen, so for every share traded there is less value traded during any one period, and that is the biggest driver of that metric," said Mr Saunders.
"Whereas if I look at CBA it is precisely the opposite; over that period the market cap of CBA is up 70 per cent, so it is a very big differential."
Mr Saunders also pointed to the general shift in the market over the past five years from resources stocks during the mining boom to financials with strong dividend flows.
