Investment tips for the last quarter

Javier Lendines, director general de MAPFRE AM

Central banks always play a very important role. In recent years, they have been very active in trying to reactivate economies by injecting a lot of liquidity into the system and, lately, they have been implementing a restrictive monetary policy to try to correct the effects of the excesses of previous years. The main consequence of these excesses is inflation, largely fueled by the monetary institutions themselves.

For these reasons, the decisions taken by central banks and the publication of the minutes of their meetings will be very important dates when trying to forecast the evolution of financial markets in the coming quarters.

Central banks have commented that their decisions will depend on macroeconomic data, so we will also have to be alert, as always, to their release. Labor market data, although usually published with some delay, will be crucial to forecasting how consumption may evolve.

In this context, despite the August correction, the main world stock market indices are showing double-digit returns for the year. And this in a year in which growth will be low, although better than expected at the beginning of the year.

It is difficult to find reasons that would justify an improvement in the scenarios discounted by the markets, so it makes sense to maintain a cautious strategy for the next quarter. This caution is all the more necessary if we also take into account that the rise in the indices has not been generalized, but concentrated in a few stocks and sectors.

All of this implies increasing liquidity (now remunerated) because, although we foresee stability in the markets, we would take advantage of falls in the indices to buy.

The reduced ability of companies to pass on sales prices and increases in production costs may deteriorate results. Hence, less indebted companies with pricing power and strong cash generation capacity may perform better in relative terms.