Confidence in the health of the economy is collapsing, while the geopolitical situation is rising to the top of investors’ concerns. This is what emerges from the latest eToro Retail Investor Beat, a quarterly survey conducted by the investment platform among a sample of individual investors in Italy and around the world.
The first quarter data reveals that Italian investors are much more concerned about the evolution of the economic situation. 71% of respondents say they have little confidence in the Italian economy (53% in Q4 2021), with 53% expecting it to deteriorate in the coming months (30% in Q4 2021). A similar situation regarding the global economy, with 74% not very confident (56% in the previous quarter) and 59% worried about a deterioration in the near future (29% in the previous quarter).
Despite this, confidence in investment choices is holding up, which despite a decline remains at a solid 62% (78% in Q4 2021). What worries Italian investors the most is the evolution of the geopolitical situation. Indeed, international conflicts are added to the risks perceived by investors as the most dangerous for their portfolios (58%), followed by the state of the global economy (42%). Inflation falls to third place (41%).
Ben Laidler, eToro’s Global Markets Strategist, comments: “The tragic events in Ukraine are a triple whammy for investors, bringing with them a toxic combination of heightened market uncertainty, higher inflation – with a soaring commodity prices and lower economic growth.
“History shows that geopolitics often does not have a lasting impact on global markets. Fundamentals remain strong, with corporate earnings rising, economies reopening after the pandemic, corporate stock market valuations are now cheaper and markets now expect central banks to raise interest rates significantly.
“The most risk-tolerant, which includes many young investors with a significant time to retirement, should remember the investment maxim ‘be greedy when others are scared’, which means investors can often benefit from ‘countercurrent thinking in times of crisis’.
In view of the data relating to investment choices, the priorities are changing for the next quarter. Among the sectors considered the most interesting in the next three months, for 47% of the sample, it is indeed the energy sector that weakens the technology sector (32%). The materials sector (30%) closes the podium.