Turbulent markets drive diversification into recession-proof assets amongst Romanian retail investors

Foto: Inquam Photos/Alex Nicodim
  • Romanian retail investors diversify into commodities and foreign bonds to recession-proof their portfolios
  • They show faith in local companies by increasing their investment in locally listed stocks, contrary to their global counterparts
  • As confidence returns to Q2 2021 levels, 64% of Romanians retail investors increased their investment over the past quarter


Turbulent markets did not scare Romanian retail investors with 9 out of 10 (87%) saying to feel confident about their investments as they continue to diversify their portfolios. In the past three months 64% increased their investments across various asset classes with commodities and foreign bonds being the most popular.


According to eToro’s Retail Investor Beat, a survey of 10,000 investors across 13 countries and 500 of which in Romania, after 15 months of faltering markets, retail investors globally are increasingly diversifying into different asset classes; the percentage holding commodities has jumped from 16% to 27%, those with foreign bonds has risen from 12% to 17%, those with alternative investments (for example, real estate) is up from 21% to 23%, those with FX exposure is up from 9% to 19%, whilst those crypto exposure has remained steady at 29%.


The focus of Romanian investors moved from equities to commodities which showed an 11 percentage point increase in the number of investors having this asset in their portfolios (from 16% a year ago to 27%). Foreign bonds were the second most popular, rising by 7 percentage points followed by alternative investments (4 percentage point increase). Notably, more Romanians have invested in alternative instruments such as real estate, with the number reaching 29% This is a category in which Romanians are more invested, compared to the European and world average of 23%.


Commenting on the latest report, Bogdan Maioreanu, eToro market analyst for Romania, said: “We see investors are increasingly taking advantage of diversification and investment opportunities in the rest of the world, as instruments become more accessible, with more ETF’s and commission free trading, for example. The market volatility of the last year seems to have been the catalyst for Romanian investors to look into some assets that were not favoured before, like foreign bonds and commodities. Also, the number of Romanian investors holding cash increased 13%, showing that they are waiting for better prices or market conditions to add to their portfolios. Like their global counterparts.”


While Romanians increased their exposure to domestic equities by 3 percentage points in the past year, the percentage of global retail investors with exposure to domestic equities has fallen from 51% in Q1 2022 to 45% in Q1 2023. The move away from the home equity market is more prevalent in the US, where the proportion of retail investors holding domestic equities has fallen from 60% in Q1 2022 to 42% in Q1 2023 – a 30%, or 18 percentage point, drop.


Meanwhile in Europe, whilst there are stark country-by-country differences, the proportion holding domestic equities has remained stable at 45%. Spain shows a pronounced decline in home bias, with 21% fewer investors holding domestic equities whilst Italy, Poland and Czech Republic buck the trend.


Whilst domestic equities have declined in popularity, the proportion of investors holding stocks in foreign-listed companies has risen modestly, up 4% since last year. More pronounced rises were seen in markets such as the US (25% increase) and the UK (12% increase), with the EU seeing a 7% increase. In Romania this number rose by only 1%.


Table shows change in proportion of retail investors holding certain asset classes

  Q1 2022 Q1 2023
% of retail investors holding asset class Global US Romania Europe* Global US Romania Europe*
domestic equities 51% 60% 35% 45% 45% 42% 38% 45%
foreign equities 28% 16% 31% 30% 29% 20% 32% 32%
foreign bonds 12% 16% 12% 15% 17% 18% 19% 18%
Commodities 16% 17% 16% 17% 27% 30% 27% 27%
Alternative investments (.e.g. real estate) 21% 18% 25% 18% 23% 27% 29% 23%

*Average % calculated across the 10 European countries we surveyed – country-by-country figures included in notes to editors


Whether it be the US tech giants, Europe’s luxury leaders, or Asia’s fast growing economies, investors globally are seemingly now looking at some of the investment options not available locally. It’s a reminder that even the bigger stock markets, like the UK or France, are only 3 to 4 per cent of global equity markets. There are 45 major developed and emerging stock markets, not one”, says Ben Laidler, Global Markets Strategist at eToro. “This latest survey shows a significant rise in investors holding international bonds in their portfolio compared to last year. This may be a smart diversification move with bond yields now the highest in over a decade, after their dramatic price falls last year. Romanian investors make no exception as they are looking further afield for opportunities in different markets and asset classes.”


Confidence returns to 2021 levels

The latest Retail Investor Beat also found that, globally, retail investor confidence has rebounded to its highest level since the 2021 bull market, 76% are confident in their portfolios vs 69% in the previous quarter. More than two in five (44%) have upped their investment contributions in 2023.


Romanian investors’ confidence is at 87%, back to the highest level previously reached in Q2 2021 after dropping to 80% in the last quarter of 2022. This reflects in their behaviour with two thirds (64%) of them increasing their investments in the past three months.

In terms of risks, inflation remains the biggest perceived threat amongst retail investors globally, with 22% citing this, whilst international conflict (18%) has risen to become the second biggest perceived threat. For Romanian investors, inflation (24%) is also seen as the biggest risk in the next three months, followed by international conflict (20%) and a potential global recession (17%).



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