- Retail investors most likely to think sustained bull market will begin in the first half of 2024
- Looming recession fear impacting sentiment with all five confidence metrics down versus Q1
- Retail investors to prioritize tech and energy sectors for remainder of 2023, with discretionary consumer goods least appealing sector.
- Most retail investors see the recent surge in equity markets as a false dawn with just one in ten (11%) believing we have entered a new bull market, according to data from the latest Retail Investor Beat from trading and investment platform eToro.
- In the quarterly study of 10,000 retail investors from 13 countries, the most common prediction for when the next sustained bull market will begin was the first half of 2024, with 20% selecting this option. Among Romanian investors only 11% believe that we are already in a bull market, with 25% believing that it will start by the end of the year and another quarter expecting it to start next year.
The findings follow recent momentum in equity markets, driven largely by AI interest and the recovery of the wider tech sector. Despite the rally though, retail investors are feeling more cautious and less optimistic than they were three months ago, potentially a result of growing recession fears.
All five Retail Investor Beat confidence metrics fell quarter-on-quarter, with the number of investors feeling confident about their portfolio, the global economy and their domestic economy all down by five percentage points (to 71%, 40% and 45% respectively). Meanwhile, the threat of a home market recession surged to become the biggest received risk amongst global retail investors (24%), while far fewer saw inflation as the top risk (14%).
Despite the growing fears of recession globally, 80% of Romanian investors polled in the eToro survey remain confident in their portfolios. The number one concern of Romanian investors for the next three months is the possible recession of the local economy (31%), followed by the state of the global economy (16%), high interest rates (11%) and inflation (9%). It is quite a change from last quarter when the main threat for investors’ portfolios was inflation followed by an international conflict.
Commenting on the data, eToro Global Markets Strategist Ben Laidler, said: “Global retail investors were early back into stock markets after the October 2022 trough and are being contrarian again now by taking a more grounded view than the broadening bull market narrative, despite the S&P 500 being up over 20% this year. Economic reality increasingly seems to be biting with recession fears surging and job security falling.”
While sentiment has dropped, a lot of retail investors are still backing the markets. Over the last three months, globally 31% increased the amount of money they regularly contribute to their portfolio while just 12% scaled back their contributions. The picture is similar over the next three months, with 31% planning to up contributions while 11% say they will reduce them. Over half (55%) of the polled Romanian investors did not make any changes to their portfolios, while 36% increased the amount of money invested in the past three months.
Retail investors are also feeling bullish about certain sectors, with technology leading the way. When asked which sector they are most likely to increase their investment in for the remainder of 2023, 30% said technology, with 15% opting for both energy and financial services, and 12% opting for real estate. The least appealing sectors to investors are discretionary consumer goods (2%) and materials (3%).
For the remainder of this year, only 30% of the Romanian investors plan to increase their investments in the technology sector including AI, 20% in the Energy sector, 15% in the financial services and real estate. Anticipating a slowdown of the economy ahead, only 1% of investors are planning to invest more in discretionary consumer goods, with only 2% looking at industrials and communications.
Bogdan Maioreanu, eToro Market Analyst for Romania said: “Tech stocks have been the place to be this year and retail investors are sticking with their long-standing bullishness, reflecting their younger and digital native roots. But the contrarian streak is clearly on display with the focus on energy, financials, and real estate stocks that have been the worst performers this year. If economies stay resilient and interest rate cuts appear soon, this could be a premonition.”
