LIVE MARKETS-Retail investors take on riskier bets despite uncertainties

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RETAIL INVESTORS TAKE ON RISKIER BETS DESPITE UNCERTAINTIES

As markets have somewhat stabilised in recent weeks, retail investors appear to be increasingly turning their attention to riskier assets, on expectations that the worst of global uncertainty might be over.

According to data from Vanda Research, retail traders are now targeting small caps, a market universe generally seen as very volatile and risky, having locked in gains after buying the dip during April's selloff.

This emerging trend could mark a significant change.

In the past, retail traders were concentrated on the over-valued 'Magnificent Seven' group of megacaps which had led the bull rally in the U.S. last year.

Small-cap stocks along the themes of quantum computing and nuclear power are among top picks. Interest in meme stocks is also emerging, such as GameStop GME.N, Robinhood HOOD.O and Hims and Hers Health HIMS.N, while CoreWeave CRWV.O is a favourite given its AI data centre exposure, says Vanda.

However, with just about a month left for U.S. President Donald Trump's pause on global tariffs to expire and no immediate signs of new trade deals yet, analysts say risks of a potential market selloff are high.

This shift of investor interest to riskier options "suggests a level of complacency that may be mismatched with still-lingering macro risks and thus adds to our sense that we are living in the final innings of the current equity rally," said Marco Lachini, senior vice president at Vanda Research.

(Johann M Cherian)

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