eToro Says Retail Investors Readying For An Economic Slowdown
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Retail investors are increasingly becoming concerned about the economic climate. Retail investors are currently worried about the slowdown across the domestic economies. The concerns come amid fears of inflation and the effect of geopolitical conflicts.
eToro says retail investors are concerned about an economic slowdown
The concerns raised by retail investors on the matter come amid rising levels of inflation and the effect of geopolitical conflicts. The latest quarterly survey published by eToro for the second quarter of 2023 has also attracted participation from more than 10,000 retail investors across three continents and 13 countries.
Some of the countries that participated in this survey include Australia, France, Germany, the UK, and the United States. The survey report has also said that global economies have become more resilient as central banks increase interest rates to deal with the high inflation levels.
The resilience of the global economy has triggered a rally in stock prices during the year. However, the majority of retail investors no longer believe that there is a strong market opportunity that can be leveraged to trigger the potential for profitability.
The report has also said that retail investors are getting ready for a possible economic slowdown. The metrics that were used by eToro to conduct the survey showed that confidence had declined significantly during the quarter.
Significant declines in confidence have also been seen across different areas. Confidence on portfolio has dropped by 71%, the global economy has dropped by 40%, while the domestic economy has dropped by 45%.
The survey has also said that the threat posed by the home market recession has emerged as the largest perceived risk among global retail investors, with 18% of the participants expressing their concerns. A smaller number of these investors, equivalent to 17%, deemed inflation to be a major risk.
Retail investors are becoming contrarian
The eToro copy trading platform has also said that retail investors had rushed in to purchase stock after the market bottomed in October last year. The majority of these investors were now becoming contrarian again.
Most investors are also not purchasing the “bull market narrative.” Only a small number of investors, equivalent to 11%, believed that the markets had entered another bullish rally and that prices would record gains again.
eToro has further said that “retail investors are running a two-pronged ‘barbell strategy’ of still-riding the tech winners and looking to scoop up some of the commodity and bank stock legends.”
Despite these trends, the eToro trading platform has also detected a significant number of retail investors that are still confident. 31% of these investors topped their investment portfolios during the last quarter. On the other hand, only 12% of these investors are planning to trim their investments.
On the other hand, 31% of investors have said that they plan to allocate more funds to investments over the next three months. 11% of them are also planning to reduce the size of their portfolio within the same period.
