Only 10% of Australian retail investors believe a new bull market is upon us, according to eToro’s latest 'Retail Investor Beat'.
The quarterly survey encompassed 10,000 retail investors across 14 countries, including 1,000 from Australia. Interestingly, 24% of Australian respondents expressed uncertainty about the start of the next sustained bull market, suggesting a current lack of conviction among retail investors.
Of the more confident respondents, the first half of 2024 was the most anticipated timeframe for a market rebound, garnering 22% support. This projection aligns with growing confidence buoyed by recent trends in equity markets, primarily spurred by AI interests and the tech sector's recovery.
Despite escalating inflation concerns, retail investors are mildly more optimistic than they were three months ago.
Where's the confidence or lack of?
Investor confidence in the domestic property market and the global economy has risen five percentage points and faith in the Australian economy has increased by four percentage points. However, confidence in personal portfolios has dipped slightly to 73%. Inflation is perceived as the leading risk by 22% of Australian retail investors, while 17% view a local recession as the primary threat.
eToro market analyst Josh Gilbert commented on the data: “The year has kicked off positively for equity markets but investors are maintaining a grounded perspective. Central Banks, especially in Australia, are steadfast in their mandate to manage inflation, which may be tempering investors' enthusiasm.”
Although portfolio confidence has taken a hit, many retail investors continue to back the markets. Over the last quarter, 26% increased their regular contributions, while a mere 11% downsized theirs. The trend is set to continue over the next quarter, with 31% planning to increase their contributions compared to 10% who aim to decrease them.
Retail investors are showing bullish attitudes towards specific sectors, namely financial services and real estate. When queried on likely investment increases for the remainder of 2023, 16% indicated these sectors. Technology was chosen by 13% and AI by 12%, while discretionary consumer goods and communications were the least appealing, at 3% each.
Gilbert added: “While retail investors remain bullish on tech stocks, they've also demonstrated contrarian thinking by focusing on financials and real estate stocks, which have underperformed this year. If economies remain resilient and interest rate cuts are implemented soon, this could prove a shrewd move."