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(Bloomberg) – U.S. stimulus checks could trigger a wave of $ 170 billion of retail inflow into the stock market, Deutsche Bank AG strategists say.
A survey of retail investors showed that respondents plan to put 37% of their stimulus cash directly into stocks, a team including Parag Thatte wrote in a note Wednesday. With potentially $ 465 billion in direct stimulus planned, that adds up to $ 170 billion, they said.
“Retailer sentiment remains positive across the board, regardless of age, income or when an investor started trading,” the strategists wrote. “Retail investors say they expect to maintain or increase their stocks of stocks even as the economy reopens.”
A combination of free trading apps and direct government stimulus has helped fuel a boom in retailer engagement in the stock market, especially from new investors. Their influence began to impact markets, including the options world, and trading volumes exploded.
Democrats are rushing to pass President Joe Biden’s $ 1.9 trillion pandemic aid package without Republicans backing, a bill that includes 1,400 checks for many Americans. Congress has already authorized 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 much more likely to trade options frequently compared to more experienced traders. Faced with a hypothetical modest sale, a majority of respondents said they would increase their investments, according to the note – although on the net they would withdraw money if the sale exceeded 10%.
Meme Stock Mania kicks off after GameStop shares the triple
A wave of buying on Wednesday reminiscent of the boom and recession fueled by retail investors last month, saw shares of GameStop Corp.
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