From left to right in the front row: Antonio Aspas (Buy & Hold), Antonio Jiménez (GVC Gaesco), Araceli de Frutos (Araceli de Frutos EAF) and Jesús Villegas (Renta 4 Banco). In the second row: Isabel Giménez (FEBF), Jorge Pérez (Libertas 7), José Manuel García (ATL Capital) and José Luis Flores (A&G Private Banking). In the third: Luis Herrero (Singular Bank), Marc Leutscher (gCapital) and Mónica Blesa (Caixa Popular). And in the fourth: Vicente Carpio (Finest Portfolio), Pilar Lloret (Nao) and Ricardo González (GPM)
VALENCIA. Analysts, operators, managers and investors in particular said goodbye to 2020 seeing how the Ibex 35 lagged behind -with a rise of 7.9%- compared to the double-digit advances of the main European stock indices... and even more than the americans. It is what it has to not have technological values and, on the contrary, to be highly concentrated in companies in the banking sector. The Spanish selective was revalued to a single digit, but the less it advanced compared to the 15% drop in the previous year.
A year marked for the second year, without a doubt, by the monetary policies of the planet's central banks to deal with covid-19. However, and contrary to what happened in 2020, the end of the 'zero rates' is already on the horizon in the midst of escalating inflation. A CPI that in Spain stands at its highest in 1992 due to the spectacular increase in the price of electricity and is now close to 7%. Big words.
Meanwhile, the United States has already begun its particular 'tapering' or withdrawal of monetary stimuli and going one step further, the United Kingdom has directly raised interest rates; but not so in the Eurozone where the European Central Bank (ECB) remains outside of orthodoxy, as its president Christina Lagarde made clear at the meeting on December 16.
But nothing better than knowing the opinion of fourteen authoritative voices such as those of the experts consulted by this newspaper, who have asked them what they expect in 2022 from the stock markets in general and from the Spanish one in particular. Here are their responses:
Ricardo González, fund manager at GPM
Financial year 2021 has been characterized by being extraordinarily low volatility, especially in the American stock markets. On average, throughout the history of the S&P 500, at some point in the year, stocks experienced average retracements of 16.52% from highs. In this year 2021, the maximum decline was 5.21%, that is, less than a third of what was usual. A very calm scenario for US stockholders, which will be difficult to repeat in 2022.
With regard to Spanish equities, it should be said that they have continued along the same lines as in previous years: yielding less than the market as a whole. While the American stock markets have risen by more than 25% and the European ones by more than 20%, the Spanish stock market has barely accumulated gains of 4%. This circumstance implies a clear opportunity cost for investors and has been the usual trend for many years; while the prospects are that this circumstance will continue for the next financial year.
Looking into 2022, the scenario remains favorable for US equities, especially if fixed income yields do not rise excessively, as this will continue to support a steady flow of money into equities. For its part, and with a view to diversifying the portfolio, I would not lose sight of raw materials either, which continue to do very well, with yields that are exceeding those of equities and with a very similar volatility.
Jorge Pérez, Director of Investments at Libertas 7
On one side of the balance we have a -still- strong investor appetite and risk assumption by investors, derived from the high liquidity available -after years of expansive monetary policies- and the few alternatives in fixed income and other assets. On the other hand, a situation with an economy still convalescing after the 2020 shock, mired in a less vigorous recovery than estimated six months ago and with signs of a downward revision in growth expectations as a result of the new outbreaks. Let's add markets trading at multiples above their historical averages, as well as valuations that are often difficult to justify based on business fundamentals. Let us also add the various indicators that confirm a substantial rise in price indices, whose evolution -temporary or structural- is yet to be elucidated, but which are leading to variations in the monetary and fiscal policies of some central banks; some changes that will have an impact on the markets.
Which side of the scale can we expect to weigh more heavily in 2022? It is difficult to predict. I am inclined to think that the current data regarding the evolution of the pandemic is going to be the justification for an extension of some of the stimulus programs, and that the outlook is not going to change much in the next 6-12 months in that sense. . And it is these stimulus programs that end up 'doping' the markets and allow them -to a large extent- to continue with their positive evolution, far removed in many cases from the tangible reality of the companies.
With all this, and in the short term, I believe that the best strategy continues to be focused on taking advantage of buying opportunities in market dips and being disciplined with sales, once our target prices are reached. What I also believe is that we are getting closer -especially if interest rate rises are confirmed- to the moment in which the huge amount of debt on which the growth of a large part of the economies is based, together with the persistent and growing public deficit, require a severe adjustment in the current ways of understanding the management of budgetary policy. This will lead to a no less severe correction in the markets.
Mónica Blesa, Director of Private Banking at Caixa Popular
The general vision of Caixa Popular is positive for next year, albeit with certain nuances. Inflation will continue to be present and we will have to be attentive to the evolution of monetary policy, both in Europe and in the United States. The slower rate of purchases by central banks will influence the markets; as will the evolution of the pandemic and the possible restrictions that may have to be applied. Other factors to follow will be the price of fuel and the evolution of the supply supply -because of the direct effect they have on the industry and business profits-, as well as the current geopolitical risks and their future evolution.
From a geographical point of view, we see more travel to Europe than to the United States. You have to be in the US, but we overweight Europe due to the best valuations and expectations. Regarding the Spanish market, comment that it has been lagging behind for a long time and everything seems to indicate that the sectors most represented in the Ibex 35 -such as the financial sector- may be favored by the expectations of the evolution of interest rates and the moment of the cycle . With all the caution that a market as particular as the Spanish generates in us, we give it a weight according to its incidence at a global level, selecting companies with stable and recurring income, low indebtedness and that remunerate the shareholder. Regarding China and emerging countries, we incorporate them to a lesser extent as diversification, as well as real assets.
José Manuel García, managing partner of atl Capital
2021 has been a good year for the markets; in fact, it has been the continuation of the recovery of the second half of 2020. Double-digit returns have been obtained in most of the stock markets, with the exception of the Spanish one with a much worse performance. In the fixed income markets, however, negative returns have been obtained both in the part of corporate bonds (investment grade or investment grade) and sovereigns. This is the base with which we are going to start 2022.
For atl Capital, three are going to be the keys that define the behavior of the markets, both fixed income and variable income, such as inflation, the monetary policies of central banks and the growth of corporate profits; while our vision for the markets for next year is moderately optimistic.
Vicente Carpio, co-founder of Finest Portfolio Ideas
There are two factors that will condition the behavior of the stock markets in 2022: on the one hand, the evolution of the pandemic and the effect of the end of the ultra-lax monetary policies of the central banks -if they finally occur and that will be conditioned by the first factor - and the evolution of inflation. That being said, investors will only put their money in companies that provide solutions in this complex scenario. The question is to know what these companies are and where they are listed. Making a good stock pick (selection of values) it is very likely that 2022 could be a good year for the stock markets in general.
Right now the solution to the problem of the pandemic is provided by artificial intelligence, pharmaceuticals, the technology that allows us to continue functioning or biotechnology; but not the financial sector, which can see how delinquency increases after the stoppage of economic activity; or the airlines; The tourism; or retail.
It never rains to the liking of central banks that have spent years looking for inflation and unfortunately the pressure is now greater than expected... and it seems that it will last longer than desired. We thought that the monetary authorities would act faster when withdrawing the stimuli and that the bottlenecks in supplies would be temporary, but this has not been the case. We must look for companies that can have an impact on this rise in prices, such as energy or real estate, without forgetting those large companies with a dominant position in their markets and that can defend their margins.
In this scenario, we do not believe that investors are looking at the Ibex 35, as it is an index with many flaws, highly bank-acquired, with a heavy regulatory burden and where it is difficult to find companies that today provide solutions to the serious problems we encountered. We see it stuck around 8,000 points, with a high risk of breaking them down if things get worse.
Araceli de Frutos, head of the one-person EAF of the same name
In general terms, 2022 is also expected to be a positive year for the stock markets, despite the beginning of a change in the monetary policy of the leading world power (the United States), which will possibly continue with the European monetary authorities. However, we must be vigilant, since the environment is changing, it is not a fixed photo and, therefore, the strategies to be adopted as well.
Without forgetting the risk of a covid-19 rebound, the main concern for markets is inflation. The persistence of high price levels would damage the purchasing power of consumers, reducing consumption, company sales and corporate profits. In addition, higher production costs due to the increase in the prices of raw materials would have an impact on the companies' margins. This rise in inflation would force us to be more forceful with rate hikes. Higher rates and tougher financial conditions would increase the costs of debt and financing for companies, thus damaging margins.
However, as the bottlenecks in certain industries are solved in the process of reopening the economies -and inventories return to level-, raw materials will moderate their prices; This, together with the base effect on inflation, may prevent central banks from being forced to tighten their monetary policies excessively, since inflation levels will normalize. On the other hand, corporate profits are estimated to rise, although not by the amount they have done in 2021. By consensus, increases of 7% in profits for 2022 are expected, although there are analysis houses that increase it to more than double (fifteen%).
In the first part of 2022 we can continue to be positive in equities although with a more defensive bias, that is, weighting less volatile or defensive sectors such as healthcare or renewables against more cyclical sectors. Without forgetting about technology, but fleeing in this case from overvalued companies or companies that do not currently generate profits, going to more consolidated companies. Specific:
Luis Herrero, director of Singular Bank in Valencia
Let us be aware that the world economy continues to be immersed in a series of uncertainties that could undoubtedly affect the future of the markets. Among other factors are a pandemic that is still with us -and that surprises us with new variants-, the high levels of inflation and the economic slowdown in China. When we already thought that we had left the health crisis behind and the economies were flying towards normalization, the rebound in infections - and the appearance of new strains - put us several boxes behind again.
In addition, unlike the last bearish periods since the start of the pandemic, we are now moving in a context of withdrawal of monetary stimuli where central banks begin to reduce the pace of purchases of asset purchase programs and, in the case of the United Kingdom, with rate hikes. With this, the monetary authorities are trying to adapt their strategy in the face of growing inflationary pressures (nobody is any longer claiming that they are 'temporary'), although the central message remains one of calm, and leaving the option open to flexibility if circumstances worsen. On the other hand, the reintroduction in some countries of social distancing measures -to control the current epidemiological situation- generates new alerts about a slowdown in economic activity, which would have a clear impact on the forecasts for the stock markets.
All this makes us cautious on equities, although risky assets may still make sense, and demanding valuations may find support in (still expansionary) monetary and fiscal policies, excess liquidity and lack of alternatives in a low rate environment.
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The Ibex 35 has experienced an irregular behavior in 2021 compared to the brightness that other indices have had, despite the strong boost from corporate profits. In this sense, in a context of reasonable economic growth and moderate inflation, the Spanish stock market could have a higher-than-average return in 2022. In addition, it must be taken into account that some of the main heavyweights of the domestic index continue to counting on a significant upward potential, which could help the selective rebound in 2022, provided that the economic recovery accompanies it.
In this context, we could look at those sectors that tend to perform well in inflationary situations such as infrastructure, personal consumption, industry, semiconductors, health equipment and materials. We cannot ignore, however, the uncertainties mentioned, so we would not ignore those other more defensive sectors either. If the epidemiological situation worsens, technology, health and food could again be protagonists in our portfolios.
Isabel Giménez, General Director of the Stock Market and Financial Studies Foundation
With the last two years marked by the covid-19 crisis and inflation that can no longer be called transitory, investors face 2022 with cautious optimism and disparate diagnoses. The forecasts for 2022 are around 5% rises in the American stock market, and above 10% for the European ones, including the Spanish one. , health and food are the refuge sectors against rebounds and new strains of the virus.
As for the Spanish market, there are many doubts. We can be optimistic due to having a very low valuation after a year of 2021, which will end with a modest return, despite the strong momentum of corporate profits. In a context of reasonable growth, the Ibex 35 could have a higher-than-average return in 2022, that is, above 10%. However, it should be remembered that the Spanish stock market has a higher risk profile than the European average given its sectoral concentration, its exposure to cyclical sectors (financial, electrical industrial), lack of large growth companies, and its exposure to Latin America, which configures it as an emerging index before the big international funds.
The evolution of the Spanish stock market will depend to a large extent on the behavior of inflation and possible movements in interest rates. An elimination of negative rates would be very beneficial for the financial sector, while the industrial and electricity sectors would benefit from a reduction in energy costs. I also believe that the values of the Ibex Gender Equality index, which promotes gender equality, represent an opportunity in the long term.
Jesús Villegas, director of Renta 4 Banco in Castellón
Speaking favorably of the markets and thinking that we will have a good 2022 -with all the noise around it-, is not an act of faith, far from it. It is not necessary to point out covid-19 and its variants, inflation, bottlenecks in sectors such as manufacturing, transport or raw materials, nor the slowdown in economic growth. We already know these conditions and the markets adjust automatically. New adverse elements will even arise that we do not consider today, which will give us investment opportunities in the face of episodes of volatility.
The existing liquidity in the market is very significant and if we add that financial costs -even with expectations of interest rate rises- are very low, any fall will continue to generate a buying opportunity in many quality assets. It is true that economic growth is slowing down, but it is still very important; while the valuations of many companies are very tight. In Europe, for example, we are looking at earnings per share of between 5-10%, a price/earnings ratio (PER) of 16-17 times and a potential of 10%. Some data that are in the historical medium range, so it cannot be argued that we are facing an expensive market.
Common sense tells us that we have to invest as diversified as possible (global), without focusing on a specific geographical area (USA) or on a specific sector (technology) and we have tools for this without assuming relevant costs. But what about Spain? What forecasts and expectations are there? Lately, it has performed worse than other geographical areas and this, sooner or later, will tend to reverse, since there are high-quality companies (Inditex, ACS, Iberdrola...) with very fair valuations and a potential of around 25-30 %.
Antonio Jiménez, territorial director of GVC Gaesco in the Valencian Community
We end 2021 looking beyond the troubled waters in which we currently find ourselves, with global markets recovering to pre-pandemic levels and with one exception in Europe, which is Spain due to its particular composition. From our point of view, we consider that volatility for 2022 will increase, with tighter returns, which could be around between 5% and 10%.
Within the troubled waters mentioned above, we find ourselves with high inflation derived to a greater extent from the problems in the supply side and it will be necessary to see if consumers are capable of absorbing the price increases that the companies will apply to their products. On the other hand, there is a risk of overreaction by central banks, which could cause volatility due to the confirmed withdrawal of stimuli and possible interest rate hikes. If we add to all this the possible variants of covid-19 and some geopolitical tensions -the case of Russia with Europe in relation to gas-, it means that we must be much more selective in 2022.
Within this search for value, investment themes must be sought that are resistant to short-term volatility by doing stock picking, companies that can function quite independently of market movements with brands strong, with non-substitutable products or in oligopolies
By sectors, we would bet on energy tourism, construction, renewables, technology and discretionary consumption and within them companies such as Banco Santander -due to its geographical diversification- and Unicaja in the banking sector; o Ebro Foods, Inditex, Fila and Unilever in the consumer sector, where we believe they will be able to transfer prices to the consumer. In the constructor, both FCC, Sacyr and the Buzzi cement company; and insurers such as Axa and Catalana Occidente could also have a good performance in 2022. Another lagging sector has been that of the 'telecos', which together with companies such as Cellnex and automotive companies -Gestamp and Stellantis-, could also fit within the diversification.
To conclude, and as positive aspects, after the corrections in recent weeks, we find the current potential upside of 20% in Spain, 17% in Europe and 9% in the United States, which together with good visibility of business results and with a low risk-free return will favor investment in variable income; but we will have to configure a mixed portfolio between defensive and risk securities in order to limit future volatility as much as possible.
Pilar Lloret, CEO of Nao Sustainable Asset Management
The large equity indices -if we include the dividend yield- closed the year positively. They do so supported by an economic recovery supported by the gradual lifting of pandemic restrictions and the drive for cheap financial leverage courtesy of central banks. Given these growth rates, the economy has not taken long to heat up and the long-awaited inflation has appeared strongly, derived in this case from the rise in commodity prices, which together with other supply problems has caused growth to slow down. , and that the monetary authorities begin to talk about withdrawing stimuli.
This situation leaves us with a scenario for 2022 marked by uncertainty about financial costs and bond returns -the United States is already proceeding to execute tapering and Europe will follow-, which directly influences valuations of the rest of the assets, including variable income. Added to all this is the expansion of Ómicron, the new variant of covid-19, which aims to be the predominant one in the world.
All these uncertainties in the market make us look at the beginning of 2022 with caution. We will continue to invest in trends aligned with sustainability and through companies with an interesting business model, with robust financial health, solid cash generation and who really take care of the shareholder. We also maintain high liquidity in order to take advantage of buying opportunities that may appear.
José Luis Flores, Senior Banker at A&G Private Banking
Stocks in general are our preferred asset in the portfolio structure. A year 2021 ends in the midst of a wave of covid-19 that reduces the strength of the expected global recovery, which has come to sow doubts about a possible future stagflation, but which is something that we do not see. We think more of a gradual global recovery and persistent inflation for 2022, which, if it soars more than what is discounted by the market, would be one of the biggest risks investors face. It is equities that can protect the most from that depreciation of money. In this sense, our recommendation is not so much geographic but sectoral rotation, avoiding overvalued growth stocks and rotating towards sectors that benefit from the normalization of the yield curve or are the ones that are the protagonists of this phenomenon of persistent inflation.
Particularly in Spain, we see greater uncertainty than in other regions and an economy more linked to the reopening than the rest. In terms of valuation, it is one of the hardest hit stock markets, while when doubts are cleared up, it will be a market with great potential, but we need to put the pandemic on hold to start thinking about fundamentals. It will be easy to see a strong rebound when the normalization of the situation begins to be discounted, but the fact that these rises are something lasting will depend on how the aid from Europe is, what the funds are used for and what structural reforms are being implemented or changing in one way or another.
The main scenario is that Spain has a positive bottom line after all the volatility and disappointment we are seeing, but we prefer to wait and see the necessary milestones are met.
Antonio Aspas, partner and co-founder of Buy & hold
There are currently three variables that will determine the evolution of the 2022 stock markets: covid-19, shortage of supplies and inflation. In general, we trust that all three will be resolved positively:
Lastly, and in relation to the Spanish stock market, we see another year as its evolution has been clearly lower than that of the European stock markets and, to a greater extent, than that of the American stock markets. The problem is that the Spanish stock market has a very high weight in the financial sector and in traditional sectors with few competitive barriers, which have been pressured by the appearance of new competitors thanks to digital disruption. Hence, we expect the behavior of the Spanish stock market to continue to be lower than that of the main European or American ones.
Marc Leutscher, co-founder of gCapital Wealth Management EAF
The year 2022 will be characterized by a year of 'normalization' very similar to what happened in 2004 and 2010, where monetary and fiscal policies begin to be less favorable to global growth. Policy makers are expected to take a tougher stance after two years of highly supportive measures. However, the strong recovery observed in early 2021 has moderated and remains uneven across economic regions. Slower growth in the United States and China, the threat posed by newly emerging variants of COVID-19, and supply chain bottlenecks continue to pose challenges for global growth and inflation.
We remain moderately bullish on equities given where we are in the business cycle. Growth could have another round of bullish surprises, giving stocks the edge over fixed income. But we are far from the unanimous bullish view of the market seen in 2020. Given the high valuations, particularly in the US, we will have to look for more tactical opportunities. We expect the market environment to be more volatile.
We understand that emerging markets fare better than developed markets. The positive view of the emerging markets is based less on the reactivation of trade -taking into account the 'covid zero' policy in China- but rather on a favorable view of the stabilization of monetary policies. Within the emerging markets, we expect some attractive windows of opportunity to dominate, and one we are watching closely is Chinese versus North American technology, given the challenges the sector has faced over the past six years. nine months.
Value stocks are also expected to perform well in 2022 due to the ongoing economic recovery. Value has lagged behind and there is room to catch up. However, the timing will probably depend on the market's perception of the path of interest rates.
Finally, Spain, with a GDP still 6.6% below the pre-covid period, is currently at the tail end of the European recovery. In 2022, it is foreseeable that the growth gap with Europe will close, with a return expected in the first quarter of 2023 to pre-covid levels. This will be supported by accumulated savings (private consumption), investments in new technologies from recovery plans (investment) and tourism (exports).