Survey: Investors fear instability amid depreciation of RON and Romanian stocks

  Investors fear instability amid the depreciation of the RON and Romanian stocks, given that it is unclear what direction Romania will take after the elections and how this will influence the economy, which is also facing the largest budget deficit in the EU, according to an analysis conducted by eToro analyst Bogdan Maioreanu."The uncertainty generated by Sunday's presidential elections is deeply influencing the Bucharest Stock Exchange, the EUR/RON exchange rate and interest rates. The BET index lost 3.8% in a week, currently standing at -1.42% compared to the beginning of the year. After oscillating around 4.97 for most of the last two years, the EUR-RON exchange rate quoted by the National Bank of Romania rose last Thursday to a maximum of 5.12, to correct slightly on Friday, to 5.11. The three-month ROBOR interest rate rose massively last week, from 5.9% to 7.31%. A higher interest rate and a higher exchange rate may, at least in the short term, increase annual inflation, which currently stands at 4.9%, already the highest in the EU. For investors, it is unclear what direction Romania will take after the elections and how this will affect the economy, which also faces the largest budget deficit in the EU. In 2024, it was 9.3% of GDP, much higher than the next highest, Poland, at 6.6%, and almost three times higher than the EU average of 3.2%. The outcome of these elections could bring clarifications, but also some changes and a possible political crisis whose effects are extremely unpredictable," the said analysis reveals.These fluctuations in the exchange rate and interest rates are taking place against a backdrop of low investor confidence in the Romanian economy. This is a reality highlighted by the eToro Retail Investors Beat survey in all studies conducted over the past two years. At the end of March, when asked how confident they were in the state of the local economy, 66% of Romanian individual investors responded that they were not confident.According to the analysis, since 2023 and until now, the proportion of those who declare themselves confident in the Romanian economy has never exceeded 38%. When asked the same question regarding the global economy, 55% of Romanian investors expressed distrust. Despite this situation, 77% of them are confident in their job security, and 68% are confident in their income and standard of living.Regarding their portfolios, 81% of the Romanian investors surveyed are confident in their investment choices. The global situation has created some changes in the exposure of their assets. If at the end of last year 58% of investors had exposure to Europe, at the end of March this year this percentage increased to 68%. At the same time, exposure to the US market decreased from 37% to 35%, and that to China from 6% to 5%.As to external risks for portfolios, a possible global economic recession is the main concern of Romanian individual investors. Approximately 26% of respondents consider this to be the main external risk to their investments, followed by inflation (23%) and the Romanian economy (18%). While the percentage of investors concerned about the state of the global economy remained unchanged compared to the previous quarter, that of investors concerned about inflation decreased from 25% in the fourth quarter to 23% in the first quarter of this year. At the same time, the percentage of investors who consider international conflicts as the main risk to their portfolio increased from 14% to 16%.The analysis also notes that half of Romanian retail investors hold local stocks, 36% hold foreign stocks, 53% hold some form of crypto assets, while almost three-quarters have cash, including savings accounts, in their portfolios, according to the latest eToro Retail Investors Beat survey. The current situation in Romania, but also globally, could bring unforeseen events to financial markets, but also opportunities for investors. Although there are no guarantees for future behavior and results, history has shown that, regardless of the color of the "swan", global stock markets have found the strength to recover.The latest edition of Retail Investor Beat was based on a survey conducted among 10,000 retail investors from 12 countries and 3 continents. The following countries had 1,000 respondents: the UK, US, Germany, France, Australia, Italy and Spain. The following countries had 600 respondents: the Netherlands, Denmark, Poland, Romania and the Czech Republic.The survey was conducted between February 18 and March 4, 2025 by research company Opinium.eToro is a trading and investment platform founded in 2007.