(Bloomberg) – According to strategists at Deutsche Bank AG, US stimulus controls could unleash a wave of $ 170 billion in fresh retail inflows into the stock market.
A survey of private investors found that respondents planned to put 37% of their stimulus money directly into stocks, a team including Parag Thatte wrote in a note on Wednesday. With $ 465 billion in direct stimulus potentially planned, that equates to $ 170 billion, they said.
“Retail sentiment remains positive across the board, regardless of age, income or when the investor started trading,” the strategists wrote. “Retail investors say they expect to maintain or expand their equity holdings even when the economy reopens.”
A combination of free trading apps and direct government incentives has contributed to a massive increase in retail involvement in the stock market, particularly new investors. Their influence is starting to affect the markets, including the world of options, and trading volumes have skyrocketed.
Democrats are rushing to get through President Joe Biden’s $ 1.9 trillion pandemic relief package without Republican backing, a bill that includes $ 1,400 checks for many Americans. Congress has already approved two rounds of direct payments, first in March last year and then at the end of December.
According to Deutsche, new investors are younger and more aggressive and will trade options much more often compared to more experienced traders. In a hypothetical modest sale, a majority of respondents said they would increase their investments, the note said, although they would withdraw money online if the sale exceeded 10%.
Meme Stock Mania starts again after GameStop Shares Triple
A wave of buying on Wednesday, reminiscent of last month’s retail investor-fueled boom, saw GameStop Corp. nearly quadrupled as of Tuesday’s close, and a host of other so-called meme shares soared.
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