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Real Estate: eToro survey: Romanian investors lack confidence in the property market and fear inflation
Market commentary by eToro analyst for Romania, Bogdan Maioreanu
Investors' attention is focused today on the Consumer Price Index data coming from the US in an attempt to assess the possibility that the Fed will continue with a higher pace of interest rate decreases in the next period. The markets are also trying to assess if the possibility of a recession of the US economy, that can influence the global outlook, is still on the table or not. This is consistent with the main retail investors' concerns as shown by the latest eToro Retail Investor Beat survey.
At the global level, the survey shows that the possibility of a recession for the global economy is the top concern for retail investors (23%) closely followed by inflation (22%), and an international conflict (17%). In fact, the concern about a recession in the global economy increased from 18% in the previous quarter while the worries about an international conflict that made a steady rise in the past two quarters from 14% to 20% decreased in this latest poll.
For Romanian retail investors inflation remains the top concern, according to the poll. About 30% of respondents consider inflation as the main external risk for their investments followed by a potential recession of the global economy (24%) and the state of the Romanian economy (14%). While the percentage seeing inflation as the main risk remained unchanged from last quarter, the one for a possible recession increased from 19% to 24%. A notable decrease appears in the percentage of investors that see an international conflict as the main risk for their portfolio, from 18% to 13%.
While a possible recession of the Romanian economy raises concerns for 14% of Romanian investors, only 8% of investors worry about new tax hikes, despite the recent analysts' estimates that after elections the new Romanian government will have to find new income sources to decrease the budgetary deficit, including by modifying the VAT and increasing other taxes.
A fear that the global and local economies are not working well is also apparent from the low level of confidence of the Romanian investors in the current macroeconomic situation. Two-thirds of the surveyed investors (66%) do not believe in a positive evolution of the Romanian economy. Despite this, 70% of respondents are confident in their income and living standards, decreasing slightly from 71% the previous quarter, which still shows great trust in their own skills and personal situation.
The eToro Retail Investor Beat survey is also showing that over three quarters (76%) of Romanian retail investors are having high confidence in their job security, also a slight decrease from the 77% last quarter. An interesting result is coming from the investors' confidence in the Romanian property market, where this quarter we are seeing a significant change. Over 55% of investors said that they lack confidence in this market, which is a 20% increase compared with the previous quarter where the majority of investors showed confidence.
When it comes to their portfolios, 80% of the polled Romanian investors have a high level of confidence in their investment choices. This figure has decreased from 82% in the last quarter. Still, over 91% of Romanian investors expect a positive return on their investments this year with over 57% expecting profits in excess of 10%. The US markets are seen as the best performers of the year by 32% of the Romanian investors questioned by the eToro Retail Investors Beat survey, while Europe is next with 25% and China is third (13%) closely followed by Emerging markets like the ones in Eastern Europe, South America or Asia (12%). And so far the markets showed them right with the S&P 500 index up over 21% this year and reaching new all-time highs and Nasdaq up 22%. Also, the BET index of the Bucharest Stock Exchange has a 15% rise from the beginning of the year.