Home News eToro: International conflict becomes the biggest risk for individual investors in Romania

eToro: International conflict becomes the biggest risk for individual investors in Romania

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According to the latest Retail Investor Beat survey by the social investment network eToro, 57% of individual investors in Romania see the international conflict as the biggest external risk for their investments, increasing from 24% in the fourth quarter of 2021.

Almost half (48%) of investors remain concerned about the impact of inflation on investment, followed by the state of the global economy (47%), the Romanian economy (34%) and rising interest rates (19%).

Ben Laidler, eToro’s global market strategist, comments: “The tragic events in Ukraine are a triple blow to investors, a toxic combination of heightened market uncertainty, high inflation due to rising commodity prices and lower economic growth due to problems caused by sanctions. “

More than half of the Romanians interviewed (55%) repositioned themselves according to these risks, 42% intend to constantly invest the same amount of money in the next 12 months, and 36% intend to invest less. However, although an increase in volatility is a difficult environment for any investor to navigate, most respondents remain confident in their portfolios (79%).

“History shows that geopolitics often does not have a long-term impact on global markets. The fundamentals remain solid, with corporate profits rising, economies reopening after the pandemic, stock market valuations now cheaper, and markets now fully expected. for central banks to significantly raise interest rates, “Laidler added.

“The most risk-tolerant, including many younger investors who have a long way to go before retirement, should remember the investment principle of ‘be greedy when others are fearful,’ which means investors can often benefit an approach against the current in times of crisis. “

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Globally, the ability of individual investors to look ahead and beyond short-term volatility is seen in their commitment to the long-term investment themes they face. 38% of them see opportunities in clean technology (vs. 37% in the last quarter), digital transformation (32%, down from 33%), cryptocurrencies and digital payments (26%, up from 22%), robotics and automation (25%, up from 24%) and population aging (24%, up from 23%). The long-term investment topics preferred by Romanian investors are digital transformation (46%), followed by cryptocurrencies and digital payments (42%), clean technologies (37%) and robotics and automation (37%).

Callie Cox, an eToro US investment analyst, comments: “When markets are volatile and the world is going through such a terrible humanitarian crisis, it may be worth taking a step back and thinking about what is emotional and what is fundamental. Take another step back, you’ll see that society is resilient, and the markets have shown their ability to recover countless times.

The lack of repositioning in DIY portfolios suggests that some risk-averse investors are beginning to consider the strategy of investing a fixed amount regularly in the markets to help mitigate high volatility and ensure that they do not miss a possible recovery. “

Rising geopolitical tensions have led some retail investors to favor domestic markets over foreign investment and to console themselves with assets they are more familiar with. Globally, 51% (35% in Romania) of respondents currently invest in local equities, compared to 28% (31% in Romania) in international equities. Asked what is the most important reason for preferring local actions, 45% of respondents (48% in Romania) said they understand better the national markets, 21% (16% in Romania) consider that foreign markets are too risky due to instability exchange rate fluctuations.

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“Given that investment and economic risks are considered high, some are looking to further diversify their portfolios. With 28% of global respondents currently investing in international equities, they see this allocation as a way to increase portfolio diversification (35%) and gain exposure to various sectors, such as the US technology sector (12%), “concludes Laidler.

The research was conducted by Opinium on March 10-23, 2022 on a sample of 8,500 individual investors from 12 countries – 1000 each in: United Kingdom, USA, Germany, France, and 500 individual investors in Italy, Spain, the Netherlands, Denmark , Australia, Poland, Romania and the Czech Republic. Individual investors have been defined as self-employed or advisory persons who hold at least one investment product, including shares, bonds, funds, an ISA (individual savings account) for investment or equivalent. They were not required to be eToro users.

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