“The markets will be volatile in 2022”
Stock markets have recently recovered part of the territory lost after the arrival of the Omicron variant. Daniel Sancho, investment manager at MAPFRE Gestión Patrimonial (MGP), acknowledges, in an interview on Negocios TV, that "the tone of the market is somewhat better." However, he warns that "we shouldn’t get ahead of ourselves" because, in his opinion, "volatility is here to stay and will be present during 2022." This is why every asset being analyzed must be well understood. “Equities are a risky asset and you have to look to the long-term and try not to get distracted by short-term noise.”
In fixed income, however, he does see that the market is sending clearer messages, such as the strong rise in the US two-year bond. "We expect a rate hike and the withdrawal of stimuli will happen earlier than expected." “In the shortest part of the curve, the arrival of Omicron hasn’t had too much impact, but did affect 10 and 30 years. There has thus been a flattening of the curve that doesn’t make much sense, so we see risk in profiles that invest in fixed income at these terms,” he adds.
In addition to the variant, inflation is still a concern and more and more voices are recognizing that these historic highs are persistent, if not permanent. “Inflation is all around us and consistently so. Perhaps some central banks aren’t giving it the importance it deserve, and we see this as an important risk,” points out Sancho. Specifically, he refers more to the message sent by the European Central Bank when considering inflation as more of a temporary “bump in the road”. According to the expert, "there are already macroeconomic data out there that would not justify the maintenance of certain economic stimuli."
Sancho also touched on the subject of cryptocurrencies. “In the short-term, we see very high risk and in the long-term we see more interesting alternatives for an aggressive profile. At MAPFRE Gestión Patrimonial we don’t recommend crypto it because, among other reasons, we don’t invest in assets that we do not fully understand,” he says.