Retail investors snap up US bargains amid market turbulence
Retail investors have piled into US equities in the past week as they looked for bargains amid the market turmoil sparked by Russia’s invasion of Ukraine.
Tuesday marked the peak of the buying frenzy as retail investors bought more than $1.9bn worth of US securities, the highest net retail buying registered since last November, according to figures from investment research firm Vanda.
Yesterday marked a continuation of a week of aggressive buying which saw an average of $1.2bn worth of equities snapped up per day by retail investors.
Vanda said the surge played a fundamental role in providing “contrarian liquidity” as institutional investors’ looked to de-risk en masse.
The frenzy last week came as Russian aggression in Ukraine sent US markets into a spin, with the S&P 500 plunging to its lowest level since June 2021 and Nasdaq falling to its lowest since May last year on Wednesday.
The average retail portfolio continues to be profitable, Vanda said, and investors show no sign of abating.
“We continue to believe that retail investors won’t capitulate as long as they sit on a positive year-on-year profit and loss,” Marco Iachini, senior vice president at Vanda said.
“This was the case for the 2018 sell-off as retail investors turned sellers only when their YoY portfolio performance dropped below negative 3-5 per cent.”
Iachini said he expected retail investors to hold their nerve unless the sell-off deepens by another 5-8 per cent, especially if retail stock favourites like Tesla begin to falter.
Separate data from retail investment platform Interactive Investor found that Tesla and big tech firms dominated the list of top equities bought last week by retail investors.
Tesla topped the list of US equities bought between the 22nd and 1st March, followed by Apple, Meta and Microsoft, with Chipmaker Nvidia appearing as the fifth most bought stock.