Macro commentary by eToro analyst for Romania, Bogdan Maioreanu
The tech-heavy US market showed last week losses on fears of anti inflationary measures by the Fed. NASDAQ hit -10% ‘correction’ while more cyclical international markets outperformed. US 10-yr bond yields briefly hit 1.9%, and Oil Brent prices neared $90. Investors are concerned that inflation will lead to increase in interest rates, slowing down economies and lower profits for companies.
According to eToro’s Retail Investor Beat* survey, for the Romanian investors, inflation remains the biggest concern and external risk over the next 3 months – 53% (vs 51% Q3) followed by the Romanian economy (45%) and global economy (40%).
Despite intensification of threats in the region, less Romanian investors fear an international conflict, 24% in the last survey compared with 26% a quarter before. This is a trend that is contrary to the one present in the region. Polish traders increased their fears from 19% in Q3 2021 to 32% in the last quarter last year. Czech increased from 19% to 26%.
In Romania, the least concerned about a possible conflict in the region are the young investors up to 34 years – 22%. The only generation that increased its concern about a conflict is the one over 55 years old, 27% up from 26% last quarter.
The same level of concern as the international conflict is shown by the Romanian investors for the possibility of taxes increase (24%).
As for the Romanian economy, 81% of investors declared that they are very confident in their job security and 77% are confident about their income and living standards. However 74% Romanians lack confidence in the local economy’s evolution.
Related to the anti inflationary measures, 70% of the respondents believe that the National Bank of Romania will further increase interest rates in 2022. In order to prepare for this 28% declared that they repaid debt, 22% saved more and 19% purchased more crypto assets. 22% took no measure to protect from this event.
In 2022, 39% plan to invest more while 37% will invest the same amount as in 2021. The field where more Romanians plan to invest this year is crypto, 51% declaring that they plan to have this instrument in their portfolio compared with 49% a quarter before. 66% believe BTC will be the best investment buying opp in the next 3 months followed by ETH (40%) and litecoin (23%).
Last year the 5 most invested crypto assets by Romanians on the eToro platform were in order Cardano, Bitcoin, Ethereum, Ripple and Dogecoin.
All other instrument allocations are decreasing. Less plan to have foreign shares 24% compared with 27% a quarter before and local shares 29% compared with 31% three months ago.
Technology remains the most interesting sector (43%) followed by energy (39%), healthcare (35%) and real estate (31%).
Romanians like technology stocks, last year the 5 most held stocks were Nio, UiPath, Tesla Motors, Apple and GameStop.
Digital transformation, crypto assets and digital payments are the favorite long term investment themes for Romanians followed by clean technology, robotics and automation. The least favorite investment theme, in a country where the average age is 43 years and the population is decreasing, is aging, with only 18% of respondents declaring to be interested in these.
*Survey research conducted by Opinium from 30 November – 14 December 2021. In total, 9,000 retail investors sampled across 12 countries – 1,000 in each: UK, US, Germany, France. 500 in the following: Italy, Spain, Netherlands, Denmark, Australia, Poland, Romania and the Czech Republic. Retail investors were defined as self-directed or advised and had to hold at least one investment product including shares, bonds, funds, investment ISAs or equivalent. They did not need to be eToro users.
**Bogdan Maioreanu, eToro analyst and markets commentator, has over 20 years of experience in financial services and investments and a strong background in journalism. He held different Corporate Banking management positions in both Raiffeisen Bank and OTP Bank, before moving to business consultancy roles working for IBM Romania among others. Bogdan is an Executive MBA from Asebuss and Washington University.