January was marked by market volatility
Securities markets have started off the year with their worst performance since 2016. In the current scenario, characterized during the last few weeks by disappointing performance in the tech industry and high volatility, one conclusion can be drawn: this may be one of the most difficult years to manage. As the best example of this, during the month of January it was difficult to generate returns on equities. “The markets do not like risks or uncertainty,” says Daniel Sancho, investment supervisor at MGP, during an interview with Negocios TV.
Under this new paradigm, which is not very different from the situation at the end of last year, central banks and investors “have to act like tightrope walkers.” The expert even thinks that we should start assuming that “growth will show a slowing trend with respect to the last two years” as a result of a rebound effect caused by economic recovery.
Nevertheless, opportunities can still be found. Can the securities market rise despite the situation seen with big tech? Yes, but there are some finer points to consider. Mr. Sancho notes that beyond the eternal dichotomy presented by the choice between growth or value companies, the best options can be found through active management.
In indexes such as the IBEX where banks represent a major portion of the valuation and the weight of technology stocks is minimal, the former can become a good alternative for investors. “These days portfolios need to include the finance sector, where good work has been done for years,” the expert emphasizes. However, although banks “have known how to make the most of the current rates, if rate hikes occur they could generate raw material that goes directly into results,” he also reminds us that volatility can affect banks in the same way as it affects any other industry.