Interview with eToro analyst for Romania, Bogdan Maioreanu

Interview with eToro analyst for Romania, Bogdan Maioreanu

by Mihai Manea, Publisher Nine O’Clock

Nine O’Clock: Q4 started with a lot of uncertainty, geopolitical tensions, continuation of the war in Ukraine and a new conflict in the Middle East. How is all this  influencing the markets?

B.M.: The markets are usually negative when it comes to uncertainty. There are few elements investors are paying attention to. The first one is oil. So far we have seen some movement in the prices, Brent oil price gained almost 10% reaching over $92/barrel. But traders are paying attention to all possibilities of spill over of the conflict that might put more pressure on supply.

We have seen a flow of capital to safe haven assets like gold and US bonds. The yields in US bonds increased the 10 years reaching 4.95% nearing the 5% psychological threshold. The high oil prices and the bond yields are functioning like a vice that is squeezing the stock markets. In the past week we have seen choppy markets very attentive to what is happening in the world.

Nine O’Clock: How should investors react in these uncertain times?

B.M.: Investors should stick to their investment plans. In fact, at the end of Q3 we asked investors through our eToro Retail Investors Beat survey, if they are going to increase their holdings in the next three months. Half of Romanian investors are looking to increase the amount they contribute to their portfolios while 45% will keep it the same.

Also we asked how they are investing. Almost half of the Romanian investors (45%) declared that they have an active approach, choosing and trading each individual investment in their portfolios. Almost one third (30%) are passive investors and the rest (23%) are having a mixed approach.

We are in the Q3 earnings reporting season and the investors are closely watching if companies are getting out of the earnings recession we have seen in the past three quarters. In fact, 24% of investors believe that earnings are the most important driver of the stock market and almost the same percentage (22%) are looking at the technical analysis with 21% believing in the macroeconomic fundamentals.

Nine O’Clock: How do you think the markets will close at the end of 2023?

B.M.: Our estimates for Q4 of this year are that the US slowdown will potentially build, as interest rate hikes finally catch up. We see soft landing, with new Fed policy flexibility.

Also, this is a pivotal earnings season. With US stocks to end their earnings recession and profits taking over from related valuations as the markets driver. This help is needed more than ever with the tall wall-of-worry from the middle east and oil to inflation and bond yields. Tech is the market Godzilla, as the biggest and best-performing sector with the strongest growth as the ‘magnificent seven’ lead the earnings recovery. With their Q3 profits seen up over 30% vs -2% for the remaining ‘S&P 493’. A possible shift from valuation to earnings is the key driver of any continued market rally.

As we approach the year end, markets are starting to look into 2024. Many investors are still cautious, but this year may be better-than-average for companies with a 2024 consensus of 10%+ profits growth and interest rate cuts.

Romanian investors are expecting a good 2023, 62% expecting a return on investment of over 5% and 34% expecting over 16% return. Only 8% expect to have losses or to end on break-even in 2023 according to eToro Retail Investor Beat survey.

Nine O’Clock: Thank you!

Notes to editors

Bogdan Maioreanu, eToro analyst and markets commentator, has over 20 years of experience in financial services and investments and a strong background in journalism. He held different Corporate Banking management positions in both Raiffeisen Bank and OTP Bank, before moving to business consultancy roles working for IBM Romania among others. Bogdan is an Executive MBA from Asebuss and Washington University.

Bogdan Maioreanu