(Bloomberg) – US stimulus checks could trigger a wave of $ 170 billion in new retail flows to the stock market, according to strategists at Deutsche Bank AG.
A survey of retail investors showed that respondents planned to put 37% of their stimulus money directly into stocks, wrote a team that includes Parag Thatte in a note on Wednesday. With potentially $ 465 billion of direct stimulus being planned, that adds up to $ 170 billion, they said.
“Retail sentiment remains positive in all sectors, regardless of age, income or when the investor started to trade,” wrote the strategists. “Retail investors say they expect to maintain or increase their shareholdings even as the economy reopens.”
A combination of free trading apps and direct government stimulus helped fuel a boom in retail involvement in the stock market, mainly from first-time investors. Its influence began to impact markets, including the options world, and turnover soared.
Democrats are rushing to approve President Joe Biden’s $ 1.9 trillion pandemic aid package without Republican support, a bill that includes checks for $ 1,400 for many Americans. Congress has already authorized two rounds of direct payments, first in March last year and then in late December.
According to Deutsche, new investors are younger and more aggressive, and much more likely to trade options frequently compared to more experienced traders. When faced with a hypothetical modest sale, most respondents said they would increase their investments, the note said – although on the net they would withdraw money if the sale exceeded 10%.
Meme Stock Mania rises again after GameStop shares triple
A flood of purchases on Wednesday reminiscent of the boom and fall fueled by retail investors last month has caused GameStop Corp.
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