● The proportion of Spanish retail investors investing in equities experienced a significant increase in the third quarter compared to the previous three months.
● The number of Spaniards investing in local securities increased by seven percentage points, while investment in international listed companies rose by nine points.
● Millennials lead equity investment, with this group experiencing the largest quarterly increase in stock holdings.
Wednesday, September 25. The proportion of Spanish retail investors investing in equities has increased significantly over the past three months, while the allocation to cash has decreased, according to data from the latest edition of ‘The Pulse of the Retail Investor’ by the multi-asset investment and trading platform eToro. This study is conducted quarterly among 10,000 investors from 12 countries, 1,000 of them in Spain.
The number of Spanish retail investors investing in local listed companies increased by seven percentage points, from 44% to 51%, while the number of those owning international listed companies increased by nine percentage points, from 25% to 34%. At the same time, those opting for cash allocation fell from 73% to 69%.
In the study, individual investors are defined as self-directed investors who own any traditional investment (such as stocks, bonds, funds or commodities) or financial derivatives. The increase in equity allocation among this group comes after the Federal Reserve cut interest rates for the first time in four years last week, marking the end of more generous savings rates.
Changes in asset class allocations among Spanish retail investors in the third quarter
“Last week, when the Federal Reserve finally gave the green light to interest rate cuts, we started to see the beginning of the end for savings rates. This will inevitably lead to more people looking to the stock market for a better return on their cash, something we are already starting to see. A lower interest rate environment is also good for listed companies, meaning we can expect profits to hold up or even rise, further supporting equity markets. As a result, investors are likely to continue to reallocate funds from cash to equities in search of higher returns,” explains Sam North, analyst at eToro.
Millennials, "rich in liquidity and eager for risk," lead the equity market
Although investors from virtually all generational groups are more likely to invest in equities than three months ago, the trend is more pronounced among millennials (aged 29 to 43). The number of Spanish millennials investing in national listed companies increased by 11 percentage points in the third quarter of the year (from 37% to 48%), while those investing in companies listed abroad increased by 14 points (from 26% to 40%).
The trend was much less pronounced among the youngest cohort of investors, Generation Z, where over the past three months investment in local stocks remained unchanged while that in international stocks increased by 10 percentage points.
Changes in allocation to equities and cash across age groups (Q3 2024 vs. Q2 2024)
“With their long investment time horizons, millennials are leading the charge into equities. This generation has the luxury of time on their side, allowing them to weather market ups and downs in pursuit of long-term growth, while they are also more likely than their younger Gen Z counterparts to have cash on hand to invest,” North adds.
The latest Retail Investor Pulse data also showed that investors are looking for greater sector diversification as interest rates begin to fall, with virtually all sectors seeing an increase in terms of investor allocation. While the technology sector remains in the spotlight, with a four percentage point increase in investor allocation (now 41%), the pharmaceutical (29%) and energy (40%) sectors also saw significant increases of four and five percentage points respectively.
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