According to our Popular Investors community, we generate eToro's unique view on the most burning topics impacting capital markets.
Results from our Q3 professional investor survey shows them looking for opportunities amongst the sharply weaker markets, as we enter the final stretch of the year.
High inflation is the biggest concern
High inflation is the by far biggest concern, cited by an overwhelming 67% of investors. High and sticky inflation is driving more aggressive interest rate hikes from global central banks, led the US federal reserve. This in turn is boosting recession and earnings fears, turbocharging the dollar, and driving market volatility. This has pushed geopolitics to a distant second concern, cited by only 17%, despite the still raging war in Ukraine.
Macro risks may produce opportunities
But many think these macro risks are now well priced and producing investment opportunities. Many do not think the Fed will be able to raise US interest rates to the 4.25-4.50% currently priced by markets. A quarter don’t see interest rates rising above 4%, whilst only a tenth see them rising above 5%. This is also driving a benign view of the recently slumped Euro, with only 17% seeing it weakening further. Likewise, the outlook for a more restrained dollar is helping views on oil. Investors are bullish on oil prices, after the big Q3 price pullback to under $90 a barrel. Only 16% saw prices falling significantly lower, as OPEC gears up to make production cuts to stabilise the market.
Most see a better fourth quarter, with some market recovery
The vast majority of professional investors see a better fourth quarter, with some market recovery. With global equities down by a quarter so-far this year only 6% see this fall getting much worse. Investors saw so-called Value stocks, from energy to healthcare, that have been relatively resilient to the sell-off this year as the most popular investment. Similarly, 40% saw these ‘defensive’ investments as the most popular theme, followed by clean energy and renewables (26%).
Crypto was one of the least popular current investments
By contrast, crypto was one of the least popular current investments with a third of those surveyed seeing Ethereum prices staying pressured after its historic merge to proof-of-stake. But being out of favour can have its advantages, with crypto assets behind only the US dollar as the third quarter's best performer.
Longer term optimism
The majority of investors were also optimistic longer term and 58% are sticking to their investment plan. Only 11% were looking to make material changes to their holdings given recent events. Whilst 60% are taking environmental, social, and governance (ESG) issues into account when making investments.
The answers include more than 100% because the answers are multiple-choice
