The best managers and CIOs prepare to invest in 2022 with a constructive attitude. There are several factors that justify this tone, up to a point, optimistic. The first is the euphoria derived from the effectiveness of the vaccines. Proof of this is the preliminary results of massively injected vaccines, Pfizer for example, against variants such as omicron.
The success of vaccination, although it develops at different rates in the world, is important in the hospital context. Take pressure off health centers and emergency rooms. Also to the ICUs. Investors will consider, next year, more the severity than the number of infections.
“This will keep the economies open and thanks to vaccines we will not return to the situation of 2020,” said the general director of BNY Mellon for Spain and Latam, Ralph Elder, in an interview with the Investment magazine. The economies will remain open, ergo the appetite for consumption will emerge.
Among the forecasts of the largest investors is that Spaniards spend the savings funded in excess by the pandemic. This situation leads the sources consulted towards the second reason that fuels their constructive attitude. There will be a new push for consumption when global supply networks are de-stressed.
The last element that stands out as support for the recovery has to do with business results. They have been strong in the last quarter, with more than 90 percent of those indexed in the S&P 500 beating expectations.
If the observation point is lowered to IBEX 35, the latest cascades of data were also generally well received thanks to the global business of Spanish firms.
The Madrid Stock Exchange, very exposed to the financial sector, could find vitamins precisely in banks. If in 2008 they were the problem, for the next recovery they are expected to be part of the solution.
“They are much healthier and in a position to lend money to companies to continue with the recovery,” says Elder.
On the support of central banks for the recovery, once the tapering for 2022 in the United States has been confirmed, “our vision is that they will continue to spend money, this will create a bill that we will have to pay at some point, although it will not be in the short term. term.”
The risks of 2022
Inflation. No nuances or embellishments. Specifically, the risk will fall on whether it will be temporary or sustained. Probably the rise in prices does not agree with any side of economists and behaves in the central territory of the forecasts.
In other words, there are components of inflation, such as energy, with very high but temporary spikes. The increased production and distribution capacity expected in 2022 will solve supply problems and push some prices lower.
There are aspects that will be more sustained over time. Investors, although highlighting the positive points of responsible investment in the fight against global warming, warn that the adaptation of companies to emission reduction commitments has a cost in the short and medium term that is inflationary.
The combined will build a high average of prices, but lower than the figures that were presented month after month during the second semester of 2021. It does seem clear that the inflation scenario prior to 2020 will not return.
How to invest in 2022?
Although investors are constructive, they do not generalize. In the next fiscal year, the dynamic management of portfolios will become more relevant. Equities will be a field that the best managers and CIOs will continue to support. They do not expect, however, the same euphoric journey for these assets as the one marked during 2021.
The next exercise will bury old investment ideas. For example, geographic bets. “It is time to look for issues and analyze them from a global context”, narrates the general director of Fidelity for Spain and Portugal, Sebastián Velasco, also in a meeting with the Investment magazine.
“We will not support the geographical vision, we prefer to have the broadest possible framework,” they assure from BNY Mellon. “We will look closely at specific assets globally.” And the topics that are popular with the data that are known as of December 9, 2021 are financial, luxury, and infrastructure.
In the months to come, the divorce between money and fixed income will come as no surprise. “It is difficult to see it as positive in an inflationary environment,” insists Elder in his interview with Investment. They will pay attention to government bonds as long as they serve to mitigate equity volatility.
If for equities it was and will be in 2022 more important, if possible, dynamism; in the fixed will be vital. Decisions should depend on the duration point to which you want to expose the portfolio.
You will have to be very cautious with government bonds, at least in the short term, and you will have to make an effort to analyze the balance sheets of companies if you opt for corporate bonds. The key magnitude in 2022 will be company liquidity rather than debt ratios.
The ESG investment, which has been spoiled from equities, will present some of the few opportunities of 2022 in the fixed through corporate bonds. Big funds will punish firms that do not perform well with these commitments and vice versa: they will lend money and reward those that do align.
Finally, alternative products will open more windows of opportunity if they invest in renewable energy, consumption or infrastructure.