Majority of ASX 200 investors confident despite recession speculations: survey

According to the latest quarterly Retail Investor Beat survey from eToro, many Aussie retail investors view last year's ASX retrace as a buying opportunity.

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Key points
  • The ASX 200 dropped 5.5% in 2022
  • An eToro survey shows 55% of investors are shrugging off that dip
  • With a global recession in mind, many investors have increased their cash holdings alongside their allocations to traditionally defensive sectors

2022 saw S&P/ASX 200 Index (ASX: XJO) investors facing the most difficult market in many years.

Certainly, some ASX 200 stocks, predominantly energy and select resource shares, certainly did very well last year.

But soaring inflation, and the subsequent series of rapid interest rate hikes from the RBA and other global central banks, pressured the wider market with the ASX 200 finishing 2022 down 5.5%.

Yet, according to the latest quarterly Retail Investor Beat survey from social investing network eToro, Aussie retail investors are broadly shrugging off the downturn, with many viewing last year's retrace as a buying opportunity.

Confident male executive dressed in a dark blue suit leans against a doorway with his arms crossed in the corporate office

Image source: Getty Images

ASX 200 investors looked at buying the dip

The survey of 1,000 Australian retail investors revealed that 55% were either positive or ambivalent about the tough market conditions in 2022.

18% of respondents said the downturn had actually increased their appetite for investing while 16% had ventured to buy the dip.

Commenting on the survey results, market analyst at eToro Josh Gilbert pointed to the long-term investment plans in play for many ASX 200 investors.

According to Gilbert:

It might be surprising to see investors so upbeat after the bear market of 2022, but the majority of this cohort think in years and decades – and history is on their side. Consecutive down years are rare for equities and bonds, with an average 18% S&P 500 annual gain following big falls.

For those with longer time horizons, the back end of 2022 offered the opportunity for Australian investors to buy companies at lower valuations, improving the outlook for long term returns.

Confidence up as perceived inflation threat recedes

The survey also revealed an 11% quarter-on-quarter uptick in ASX 200 investors who feel confident about their portfolios, with that number reaching 77%. That comes as the threat of inflation looks to be waning.

Investors now feel that a global recession represents the biggest risk to share markets, with 24% seeing this as the main threat.

And they're not sitting on their laurels, with many adjusting their ASX 200 and other portfolio holdings defensively in preparation for future opportunities.

Respondents holding cash assets increased from 60% in Q3 to 79% in Q4.

Traditional defensive sectors also saw a boost, with healthcare and utilities stocks both increasing by more than 10% in Q4.

Staple consumer goods and energy also increased by more than 10% quarter on quarter.

"Although the RBA might still be able to navigate a soft landing, investors will know that most experts are predicting at least a mild global recession," Gilbert said. "Many are repositioning accordingly, with more looking into defensive stocks as well moving to cash in Q4."

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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