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Trade: Romanian retail investors lack confidence in the local economy
Macro commentary by eToro analyst for Romania, Bogdan Maioreanu
This year has been a paradoxical one so far, unfolding between conflicts in the Middle East, Ukraine and the geopolitical tensions in Asia but with investors bullish and looking forward to central bankers finally moving towards interest rate reductions. After a first quarter of all-time highs in the stock markets but also in gold and in crypto, investors are starting to look with a critical eye at the economies' evolutions, according to the latest eToro Retail Invest Beat survey.
In Romania, we have seen a sharp deceleration in inflation last year, but with an increase at the beginning of this year following Marcel Ciolacu’s emergency government measures to hike corporate taxes. This raised the concerns of Romanian investors that inflation might return to higher percentages, the poll shows. When asked what they think is the biggest external risk to their investments, almost one third of Romanian individual investors (31%) mentioned inflation. This is a 4% increase compared with December last year. At 7.23% Romania was the country with the highest annual inflation in the EU in February this year.
At global level, inflation is still a concern, together with the possibility of a recession for the global economy for 21% of the surveyed investors. For the Romanian investors, the possibility of a global economic recession is ranked second (21%) followed by the possibility of an international conflict, which rose 4% since the end of last year but reached only 15%, below the global average (17%).
A possible recession of the Romanian economy raises concerns for 13% of the Romanian investors, while 11% worry about new tax hikes. A fear that the global and local economies are not working well is apparent from the low level of confidence of the Romanian investors in the macroeconomic situation. More than two-thirds of the surveyed investors (68%) do not believe in a positive evolution of the Romanian economy. Despite this, the same percentage (68%) are confident in their income and living standards, which shows great trust in their own skills and personal situation. The survey is also showing that three quarters (75%) of Romanian retail investors are having high confidence in their job security.
When it comes to their portfolios, 78% of the Romanian investors are having a high level of confidence in their investments. However, this figure has decreased by 3% since last year. Still, over 91% of Romanian investors are expecting a positive return on their investments this year with over 58% expecting profits in excess of 10%.
So far, 2024 seems to be rewarding investors’ confidence, with stock exchanges reaching new peaks, tech stocks booming and a general bullish sentiment on the markets. Investors are now looking forward to the promised interest rate reductions this summer coming to boost some of the sectors that have been struggling lately, such as real estate and more traditional industries.
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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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