no, inflation does not discourage private investment

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Stock market: no, inflation does not slow down private investment

Inflation and the unrest caused by the war in Ukraine have not led individuals to flee the financial markets. Individual shareholders are even more numerous and maintain confidence.

The stock market still seduces. Despite an uncertain environment dominated by inflation and the tightening of monetary policy by central banks, individuals, including the youngest, continue to invest in the markets. More than 80% of stock market investors believe the markets remain an attractive investment medium and long term, according to an OpinionWay poll for Fortuneo. Contrary to what one might think, the increase in consumer prices may even prove to be a stimulus for investment. For example, 68% of individual shareholders state that investing on the stock market is the way it is a means of generating additional income.

These statements reflect the flow of transactions observed by the AMF (Financial Markets Authority). Depositor Relations Director Claire Castanet notes that “companies that pay dividends or whose shares are easy to buy and sell attract more investment from individual shareholders.” Same story with Grégory Guermonprez, director of Fortuneo. In total, 44% of online banking customers are looking for investments that pay dividends.

Stock market transactions depend on the age group and income of individual shareholders. “You are not going to invest in the same way whether you are a student, a young worker or a senior professional, because your income and expenses are not the same,” recalls Philippe Guillot, director of markets and data at the AMF. . Claire Castanet confirms that the youngest are “more likely to invest in companies outside Europe than their older ones”. The American market and tech companies are therefore very popular with these new investors.

Especially the elderly prefer Cac 40 companies. The director of investor relations of the AMF notes a tendency for new individual shareholders to prefer planned investments. The latter are “more suitable for people with a small budget”. Indeed, they make it possible to “flatten the investment over time by regularly putting a certain amount on the exchange”, emphasizes Claire Castanet.

Cautious investors?

If the way of investing differs according to the profiles, it is the same for the amounts invested. AMF’s Philippe Guillot says the average transaction amount is €2,600 for a typical customer of a traditional bank. For followers of neo-brokers such as eToro or Trade Republic, who are often younger, the average amount of a transaction is lower, as it reaches 700 euros. Regarding the total amounts invested, Grégory Guermonprez notes little difference between the amounts spent by the young and the oldest. They invest 4,000 euros and 10,000 euros respectively. And the gap is getting smaller every year.

The inflationary context still has an impact on the behavior of individuals on the stock market. In the third quarter of 2022, the Autorité des marchés financiers (AMF) noted a 35% decrease in the number of investors who carried out at least one transaction, buying or selling shares, compared to the previous quarter. However, it is difficult to draw conclusions. “This wait-and-see attitude can be interpreted in different ways,” explains Philippe Guillot, director of markets and data at the AMF. “It could mean that individual shareholders are cautious about inflation, or it could just as well mean that investors are happy with their current positions and don’t want to change them at this point.”

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