Several open fronts for investors
The global economy is currently at a point of tense calm: several open fronts are putting pressure on investors’ decisions in a context of increasing uncertainty in the markets.
Without going any further, the geopolitical crisis in Ukraine is still present. Aside from the talks by Western countries with the Kremlin to lower the tone, Alberto Matellán, head economist at MAPFRE Inversión, believes that, even without having yet entered a war scenario, “we are already suffering the first consequences of the tension.” “Rising energy prices and, therefore, rises in inflation.” However, in the worst case scenario, he stated that investors should bear in mind that the harshest effects “would not be economic, but structural and social.”
One of the issues around the supply chain is in reviving demand. The price hike in commodities (at their highest levels since 2008 and close to historical records) could, in the expert’s opinion, have a “positive impact for companies and producing countries,” but not for the clients themselves, who would be affected by inflationary drifts and exogenous factors.
It has been around for several months, but inflation is still on everyone’s lips, with levels that in the United States point to be higher than the previous month (analysts are betting on a CPI of 7.3). “Almost all economists were expecting the peak to come in December, and in light of what we saw, this will not be the case, at least not in Europe,” he explained. Barring surprises, he added that “the ECB should not change the decisions or the deadlines set.”
In this context, the banking sector is the one that has benefited the most since the beginning of the year. Specifically, supported by the change in the expectation of the rate curve, the traditional business of banks: granting loans. “We came from a decade in which banks were hurt by low curves and regulation. And now they seem to be benefiting,” Alberto emphasized.
These and many other factors must be taken into account in investment portfolios. As Alberto explained, “we come from a volatile market, and that tends to scare the retail client.” In the same line are the more conservative clients who, with a greater weight on fixed income, are seeing how this type of asset is being harmed. For all these reasons, he noted that the keys should be “investment and savings objectives,” especially periodic savings, since “it immunizes investors against volatile movements.”