Market commentary by eToro analyst for Romania, Bogdan Maioreanu
Despite the pressure induced by the recession narratives, the global economy slowdown and the geo-political tensions, the European and the US stock markets rallied in July. DAX – the German Index – gained 6.5%, CAC40 – the French index – gained 8.65% and S&P 500 gained over 10% in the past 30 days. But the markets are still in the negative territory after the sell offs started at the end of 2021.
According to the latest eToro Retail Investor Beat survey, during the downturn only 5.7% of the Romanian investors sold their investments, 34% added to their portfolios and 60% made no change to their investments. Close to us are the Czechs investors out of which only 6.8% sold their investments but 17.8% of the Polish investors sold their investments in the recent markets sell offs. One of the reasons for this behavior can be found in why people invest and most are related to long term goals.
Over 50% of the Romanian respondents declared that their number one reason for investing is long term security followed by the desire to obtain financial independence. For the Polish and French investors’ main reason is the same but the second one is to supplement their lifestyle. For the Czechs, the main reason is to help fund a retirement alongside a pension followed by the desire to outperform the savings returns. The Germans are seeking in the investments a help for retirement and long term security. Investors from Italy are looking at investments as a way to outperform their savings and to provide long term security, with a similar situation in Spain, but with Spaniards’ main reason being the long term security followed by outperforming the savings.
Across the Atlantic ocean, the eToro Retail Investor Beat survey shows that American investors are seeking through investments long term security and a way to fund their retirement alongside a pension. A recent poll made by Gallup showed that 58% of US households are having investments in stocks. This percentage changes with education. The higher the education, the higher the percentage. 79% of people with postgraduate education have investments, while only 39% of the people with highschool or less education are investing in stocks. Income is also a relevant factor for investing. 89% of the households that earn 100.000 dollars or more and 61% of the households earning between 40.000 dollars and 100.000 dollars are having investments in stocks. Below 40.000 dollars only 25% of households have investments.
According to the latest eToro Retail Investors Beat survey, while in the US 52% of the investors are having investment portfolios of over 69.000 dollars, in Romania only 6.1% are in that category. 71% of the Romanian investors are having in their portfolios less than 58.000 lei , equivalent to almost 12.000 de Euro. In the same situation are almost 57% of the Polish and Czech investors. As we look at higher income economies, only 38% of the Germans and 36% of the French investors are having portfolios below 10.000 Euros.
Despite the low values of portfolios, Romanian investors are having a plan, with 32.5% of investors buying or selling assets monthly, 18% weekly, 5.3% daily and 13.5% quarterly. Close to our behavior are the Czechs, 34% of the investors are trading and investing monthly but only 8.8% are trading quarterly. The Polish investors are different, 22.2% trading monthly and 20.4% trading every quarter. By contrast, 21.9% of the American investors are trading monthly with close to 30% trading less frequently than every year.
Survey research conducted by Appinio from 7 to 17 June 2022. Previous waves were conducted quarterly in conjunction with Opinium. In total, 10,000 retail investors sampled across 14 countries, 1,000 in each: UK, US, Germany, France, Australia and Spain. 500 in the following: Italy, Netherlands, Denmark, Norway, Sweden, 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.
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