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Global traders and investors seem reluctant to consider the prospect of a bear market despite rising global risk in the year ahead
LONDON, UNITED KINGDOM, 31 May 2022 – According to a survey run by Capital.com, the high-growth global trading and investment platform, 62% of traders on the platform think that inflation and geopolitical risks will be the two most influential events to impact financial markets in 2022. Interestingly, despite inflation and geopolitical risk featuring strongly as top concerns among retail investors, only 21% of traders thought that interest rate hikes would be a key event for financial markets this year.
The findings, which were revealed as part of a survey of 4267 Capital.com clients polled globally, suggest that retail investors are perhaps expecting markets to bounce back. The survey was carried out between 21 February and 31 March 2022.
David Jones, Chief Market Strategist at Capital.com, said: “At the moment the majority of investors still seem to be taking the view that the set back in stock markets for the year so far is just temporary and a pause before the bull market returns. Let’s not forget - investors and traders have been very well rewarded for more than a decade for just buying the dip and assuming higher prices are just around the corner. Of course back then we didn’t have the threat of further rate rises and stubborn inflation - so the question is if this time it will be somewhat different.”
The survey also revealed that retail traders and investors are overwhelmingly neutral on the stock market. In fact, 42% of respondents said they had a neutral view on the stock market for 2022, while 30% held a more bullish outlook. The remaining 28% were bearish on the stock market.
“42% of respondents having a neutral expectation of the market is testament to the amount of volatility we have seen in just the first months of 2022 - and how that has come as a shock to many investors who have enjoyed years of bull markets,” noted Jones. “The fact that more of this sector is not bearish on the stock market perhaps shows how ingrained many have become since the financial crisis that markets will ultimately shake off any shocks”
Retail traders remain bullish on tech sector IPOs
When asked what sectors retail investors were following closely for potential IPO news, 35% of respondents said the Tech sector, followed by Energy (23%), Finance (23%), Metals/mining (8%), Automotive (6%), and Retail (5%).
“2022 has seen a significant slowdown both in terms of the number of IPOs, as well as in terms of proceeds raised, compared to 2021. However, this is not surprising given the incredibly high activity of global IPO markets last year,” said Jones.
“The slowdown this year is the direct consequence of geopolitical tensions, inflation and interest rate rises. Although Tech IPOs saw a significant decline compared to last year, Tech is still the most followed sector for public listings by our clients, closely followed by Energy, which instead represented the most active sector for IPOs since the beginning of the year. We have seen a number of IPOs either not perform as well as expected, or get pulled with a view to trying to list in the future. So for investors it is something of a waiting game to see if the volatility in markets abates and we return to more normal conditions,” he added.
Capital.com enables clients to trade derivatives of over 6,000 of the world’s most popular markets through its web and mobile platforms. The platform also facilitates commission-free stock dealing with tight spreads. With no hidden costs or mark-ups and with no fees to pay on deposits or withdrawals, clients can invest directly in an underlying stock without incurring any additional costs or expenses. Capital.com also provides clients with access to free education and trading tools to help them hone their trading knowledge.