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Despite geopolitical tensions, investors are looking toward a profitable 2024
Macro commentary by eToro analyst for Romania, Bogdan Maioreanu
The beginning of 2024 is not the best we could have had. From the conflicts in the Middle East, Ukraine and the geopolitical tensions in Asia, to social movements in some of the European countries including Germany, France and Romania and a huge dose of elections, it starts to be shaped as a year with a lot of uncertainty and instability.
We have seen a sharp deceleration in inflation last year, but investors are still worried that it might return to higher percentages, reveals the latest eToro Retail Invest Beat survey among individual investors. In the Eurozone inflation in December was 2.9%, while in October 2022 it peaked at 10.6%. In Romania inflation decelerated from a maximum 16.76% to a minimum of 6.61%. In the US we are seeing the same behaviour, from a maximum of 9.4% to a minimum of 3% in June 2023, but the annual inflation rate in the US went up to 3.4% in December 2023. Despite this, investors continue to see inflation as the largest risk in 2024 for their investment portfolios. Over 27% of the Romanian investors believe this, 35% of the Czechs, 31% of the Polish, 29% of the Americans and 24% of the Germans. However, inflation is a big concern for only 15% of the Dutch, 17% of the Norwegians, and 21% of the French investors.
Despite the increasing geo-political instability an international conflict is not in the first three concerns for the investors. Only 11% of the Romanian investors polled in the survey are seeing this as the main external threat to their portfolios. They are more concerned with the possibility of a global recession (23%), a possible recession of the Romanian economy (15%) and the increase of taxes (12%).
Almost three quarters (73%) of the Romanian retail investors are not trusting the evolution Romanian economy. Despite this, almost the same percentage (74%) are very confident in their workplace security, and 68% also believe in the stability of their income and living standards. In a country with the largest home ownership rate in the world of almost 95%, over half (58%) of the investors do not believe in the prospects of the local property market.
After a strong 2023 for the markets. investors are still seeing the full part of the glass. Romanian investors are among the most confident in their portfolios and investment strategies according to the latest eToro Retail Investor Beat survey. An overwhelming 81% declared that they are confident in how they are investing, which places them in second place in terms of confidence, tied with German investors. The Dutch are most confident in their portfolios with over 94%. Moreover, over 92% of Romanian investors are expecting a positive return on their investments in 2024 with over 46% expecting over profits in excess of 15%.
So far, 2024 seems to be rewarding investors’ confidence, with stock exchanges reaching new peaks, but it remains to be seen if the threatening clouds of conflict, recession and inflation turn into a storm or dissipate into the wind, as investors hope.
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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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