As it has almost been a month since we closed the door on a year defined by notoriously bearish global markets, what does the outlook for 2023 look like for investors around the world? According to a new survey, the outlook is more optimistic than you may think.
Retail Investors Maintaining a Hopeful Outlook
Despite global markets being impacted by the pandemic, geopolitical tensions and economic uncertainty, a new survey has revealed that retail investors around the world are maintaining a hopeful outlook for the remaining months of this year and beyond.
The survey found that 95% of investors in Turkey plan to continue investing in the early months of 2023. This is compared to 89% in Spain and 80% in Italy. Additionally, more than half of respondents predict the onset of a bull market within 12 months, with Turkish investors being the most optimistic at 73%.
New Generation of Retail Investors
The emergence of a new generation of retail investors is one reason for optimism about the financial markets. This is a shift from the traditional approach of waiting for market conditions to improve before investing. These investors have become conditioned to “buy the dip” regardless of market conditions and are less influenced by traditional market wisdom.
This has led to retail investors becoming a more powerful collective force than professional investors. Additionally, many investors believe that stocks are poised for a rebound in 2023, as signs of inflation peaking may allow central banks to pivot on monetary policy and start cutting rates in response to a slowing economy.
Of course, this relatively upbeat outlook does not soften the blow of a notoriously bearish year, as most retail investors saw their portfolios drop in value during 2022. In the United States, 76% of investors saw their portfolios drop, followed by 66% in Italy and 51% in Spain. However, in Brazil, only 43% saw their portfolios suffer losses (compared with 40% who saw gains), and in Turkey, a striking 78% saw their portfolios rise in value and only 15% experienced losses.
Despite the losses, investors remain hopeful about the market in 2023. But they should exercise caution and make decisions based on their risk tolerance and investment goals. The market is inherently volatile and can be affected by a wide range of factors, such as economic data releases and geopolitical events. Additionally, diversifying portfolios by investing in a mix of different assets such as stocks, bonds, real estate, and commodities helps mitigate risk if any one sector or asset underperforms.
Tech and Renewable Energy Sectors
Digging deeper into the dip in the market, tech stocks experienced a particularly hard 2022, as shares in companies like Intel have dropped by more than 50%. Despite this, a significant number of investors think that 2023 could be ripe for a rebound in the tech space. 34% of U.S. investors believe that tech is the sector with the most potential in the coming months, followed by 28% of investors in Spain, 27% in Brazil, and 10% in Turkey. This sentiment is echoed by analysts at Citi, who are also projecting a bounce-back year for tech stocks in 2023.
Investors are also optimistic about the renewable energy sector for 2023. 39% of Turkish investors consider it the sector with the most potential in the months ahead, followed by 29% in the U.S., 27% in Brazil, and 17% in Spain. This is likely due to the growing global focus on sustainability and the shift towards renewable energy sources as a way to combat climate change.
In conclusion, global market conditions in 2022 were bearish, but retail investors around the world remained optimistic about 2023. Hopes for a rebound in the tech and renewable energy sectors encouraged investment, as did investors’ willingness to “buy the dip” regardless of market conditions. However, cautious optimism is warranted; it’s important to keep an eye on market developments, diversify portfolios, and not make hasty decisions based on sentiments. By doing so, investors can navigate volatility and potentially capitalize on opportunities for growth in the coming year.