The rally of the markets that started at the beginning of the year continues, as the Fed’s moves appear to confirm that the end of the rate hike cycle is very close. Last night the Fed did not surprise the market by raising again the rates by another 0.25%, eToro analyst Bogdan Maioreanu writes.
While the economic data is showing a deceleration of inflation, Fed Chair Jerome Powell considers that it is too early to declare victory as the US economy is still in the early stages of disinflation. The rate hikes most likely will continue with Powell mentioning a couple more raises before a pause, adding that there is more work to be done to lower inflation.
Inflation is still seen as the biggest risk for their portfolio by 28% of Romanian individual investors in the first three months of this year, according to the latest eToro Retail Investor Beat survey.
Among the main risks cited by investors, inflation is followed by a possible recession of the global economy, international conflict and concerns about the state of the Romanian economy. In the context of the current discussion in Romanian society of the possibility of an increase in taxes, only 9% of the investors are fearing this possibility. When asked about the risks for the whole year 2023, the figures are changing: 23% of investors are fearing a global recession, 21% are fearing inflation and 18% an international conflict.
For this year 26% of the Romanian investors are expecting returns of up to 10%, 22% anticipate gains ranging from 10 to 20% while 12% foresee earning from 20 to 30% and 11% are expecting their returns to exceed 30%.
When asked which markets are offering the best opportunities this quarter, 36% pointed to Europe, 30% to the USA and only 11% are looking toward China. The ranking is maintained in regard to the investing perspectives for the whole year. Only one fourth of the Romanian investors are expecting a loss in 2023.
The 2022 stock market selloff did not scare 72% of the Romanian investors, the eToro Retail Investor Beat survey shows. A third of those investors (33%) consider that the markets will have better results this year, 31% know that the markets are cyclical, 29% know that markets fluctuate because they are long term investors and 29% were happy to buy quality assets at lower prices.
So far the markets are confirming the investors’ positive expectations, with the US S&P 500 index up 7.72% year to date, the German DAX index up 10% and the Chinese Shanghai Index up 6.39%.
For the next three months only 21.4% of investors declared that they will invest less than usual. The main reason for 41% of them is the need to use that money to cover increasing household costs. A quarter of respondents are using the investment money to create an emergency fund to cover unexpected expenses or the loss of income and almost 20% are accumulating extra cash to invest when the markets will look better.
When it comes to the historical regions, 31% of investors are from Muntenia, 21% from Transylvania and 20.6% from Moldova. Also, the poll shows there is a gender disparity when it comes to investing – with two thirds of investors being men (67%) while only 33% of investors are women.