Retail investors around the world remain resilient despite stock market sell offs and recession fears, with nine in ten either holding onto investments or buying the dip, according to the latest ‘Retail Investor Beat, a quarterly survey of 10,000 retail investors across 14 countries, conducted by the social investment network, eToro.
Globally, less than one in ten (8%) sold their investments during the recent stock market sell offs, two thirds (64%) held firm with their positions and another 28% bought the dip. Only 6% of Romanians sold their investments while 60% kept the investments and 34% bought the dip.
“Despite a barrage of setbacks across global financial markets, retail investors have found the strength to look past the short term volatility and use these drops in prices to bolster their portfolios for the long term,” comments Ben Laidler, eToro’s Global Market Strategist.
“For many retail investors this is their first experience of a pull back in markets. Managing risk, mastering emotions and maintaining a focus on long term goals is something that even the most established investors struggle with. Our latest Retail Investor Beat shows that retail investors are resilient, they have stayed invested and are building diversified portfolios to weather the storm. With bull markets ultimately built on the shoulders of bear markets and near four times the length and magnitude, staying the course should serve these investors well.”
In light of recent market volatility, Romanian retail investors have repositioned their portfolios by increasing their exposure to crypto (26%), cash (23%), commodities (19%), domestic equities (16%), foreign equities (16%), alternatives (14%), domestic bonds (14%), currencies (13%) and foreign bonds (10%).
Looking at sectors, 29% of the Romanian investors increased their exposure to the energy sector, 24% bought technology and 23% financial services. Utilities (22%), healthcare (17%), real estate (16%), staple consumer goods (18%), telecommunications (15%) materials (14%), discretionary consumer goods (12%), and industrials (10%) followed.
Globally, retail investors’ confidence in their investments has consistently declined over the five quarters since the inception of eToro’s Retail Investor Beat. Confidence has fallen from 83% in Q2 2021, 81% in Q3 2021, 80% in Q4 2021, 73% in Q1 2022 to 72% at the end of June this year. In Romania, confidence in investments has slowly fallen from 87% in Q2 2021, 83% in Q3 2021, 85% in Q4 2021, 79% in Q1 2022 to 78% at the end of June this year
Rising inflation is back as the largest risk also for 62% of the Romanian respondents, dethroning international conflict, which was the highest risk last quarter (57% in Q1). Nevertheless, international conflict is still the second largest risk (45%) followed by the evolution of the global economy (43%) and the Romanian economy (32%). 16% of Romanians continue to believe that a change in taxation is a big risk for their portfolio, up from 12% last quarter.
Despite these risks, 44% of Romanians (48% globally) plan to invest the same amount of money over the next 3 months, while 36% expect to invest more. 45% of Romanian investors believe energy will still present the best investment buying opportunity over the next three months, followed by technology (36%), utilities (31%), financial services (24%) and real estate (23%). Globally, a third (32%) believe energy, followed by technology (31%) and real estate (25%) will be the best buy over the next quarter.
“Energy and real estate are two of the smallest global sectors, they have historically been good hedges against inflation and remain top of retail investors’ buy and watchlists. What we have seen in Romania is that across all levels of experience, retail investors have increased allocations to a series of defensive sectors but still believe in the technology sector. Romanian investors strongly believe in their investment choices and are resilient in pursuing their investment plans”, Bogdan Maioreanu, eToro Market Analyst for Romania concludes.