Evolution of the financial markets in 2020

Advanced the predictions for this year.
Go to Perspectives 2020

Summary of the evolution of the markets

For Enrique Marazuela.

  • 2020 part of a better base that 2019, as has completed the economic slowdown , the overall risks have excluded the stages more drastic and have stability monetary in levels very laxos.
  • Reiterate the importance of the diversification. Recommend to our customers have all the kinds of assets, in the proportions that are congruous with your risk profile and your aims and objectives.
  • Are underconsidered in public debt European, head office and peripheral, neutrals in bonds corporate and are overconsidered in bonds emerging, especially the so-called ones in local currency and those ones of issuers Asian. Are constructive in equities.
  • The sustainability is far more than a fashion for the companies that have that label, is a trend that has come for stay and that affect all the kinds of assets and to all the companies. 
  • 2020 part of a better base that 2019, as has completed the economic slowdown , the overall risks have excluded the stages more drastic and have stability monetary in levels very laxos.
  • Reiterate the importance of the diversification. Recommend to our customers have all the kinds of assets, in the proportions that are congruous with your risk profile and your aims and objectives.
  • Are underconsidered in public debt European, head office and peripheral, neutrals in bonds corporate and are overconsidered in bonds emerging, especially the so-called ones in local currency and those ones of issuers Asian. Are constructive in equities.
  • The sustainability is far more than a fashion for the companies that have that label, is a trend that has come for stay and that affect all the kinds of assets and to all the companies. 

Can opinion a paradox but 2019, that finally was a year fantastic for all the kinds of assets financial, split with very weak perspectives: setback of the financial markets in the last stretch of 2018, deceleration persistent of the growth, initiated at the end of 2017, threat of new rate increases on the part of the Fed, tensions global between China and The United States, brexit, etc.

Thus, and being 2019 a year that has gone improving gradually, believe that the catalyst main has been the change of sign in the monetary policy , especially striking in the Fed. Additionally have been particularly relevant so much the reduction of the tensions among China and EE.UU as the brexit, both produced ones in the last term of last year. 

2020 part with good portents in the evolution of the financial markets: 

  • The deceleration seems have headdress floor and now talk of the stabilization in the growth.
  • The inflation follow without be main character and allow to the central banks continue in your area of comfort. 
  • The oil price not be a threat for the inflation, in spite of the conflicts geopolitical punctual. Yes must pay attention to the perspectives of the North American production, that has allowed an offer abundant in recent years. 
  • Have continuity in the monetary policies , that keep the tone laxo that have currently. 
  • Main risks of 2019, as are the commercial tensions between China and The United States and the brexit (which lowered in the last part of last year), follow present in 2020 although excluding utmost outcomes.
  • In 2020, the presidential elections from The United States go taking leading role, being an extraneous risk to the already mentioned in the point previous. 

These are good news for the markets of risk assets. However, not can launch the bells to the flight in this 2020 given that important rises of the quotes last year have quitted the assessment in very demanding levels. 

Before analyze the different kinds of assets financial, want remember something that owes be a vital signs in your portfolio: the diversification. Is good invest in each and everyone of the kinds of assets financial, in the proportion that is compatible with your risk profile and with your aims and objectives.

 

 

Believe that this assessment is excessive in the fixed-income governmental European, so much that one of central countries as that one of the periphery. This owes to the low yields of the bonds of public debt, that in many cases are even negative. The stability monetary, with the current tone so laxo, avoid setbacks in the prices of the debt, but not rejected a pending elder in the curves (rises of the returns of the bonds with longer maturity and stability in those ones of the bonds shorter).

In the event of have surprises positive in the recovery, so much of the economic growth as of the inflation, what be a stage probable if the governments apply a fiscal policy expansive for reactivate the recovery, see great pending.

In the bonds corporate, is a lot of more balanced the binomial of expected profitability adjusted to the risk, but not what is enough as so that result appeals. The differential of returns, that is the measure that use for measure the assessment, is in the area cancellation of your range of oscillation of the last decade, that is, are pricier that cheap. Although can appear surprises of growth joined to the stability monetary, that are good news for this kind of asset, not think in new narrowings of the mentioned differential, precisely for your low levels current.

Therefore, keep our neutrality, being this a recommendation common for all the bonds corporate, so much if are highest-quality credit (the Investment Hoes) as though are of high performance (the High Yield).

Our bet for the bonds emerging continues, despite important rises that your prices registered in 2019, on the base of a context that is still favorable by the best economic anticipated growths world, the continuity of the monetary policy of the Fed and a dollar stable. Prefer the bonds emerging in local currency, although have more risk that the so-called ones in hard currencies, being Asia our area favorite. 

Not think that the dollar leaves to revalue in 2020.

Are constructive in equities . All the rises produced in 2019 explain for an increase of the assessment, since the benefit of the companies has remained basically plane. The end of the deceleration and the stability monetary are good news for the stock, although already are discounted in the quotes. So that these continue your rise is necessary that see an increase of the benefits, which be very linked to the sales since the margins are so high that see difficult that expand. For regions, see the advantage in Europe for your tone more cyclical.

The sustainability has a key importance in the investments, above all for prevent risks; think that a company with an activity that not is sustainable faces some severe uncertainties, being able to happen that:

  • Your customers, more and more sensitized with this issue, the abandon.

  • The authorities can regular your activity or, even, forbid it. Additionally can choose tax it with taxes, being this one via of repair of the social impacts and environmental that cause.

Although has emerged a fashion with the sustainability in the companies to which assigns this label, think that goes well beyond. Is a trend structural.

Not make mistakes, moreover is a trend that has come for stay and that act transversely affecting all the kinds of assets, to all the companies and to all the activities. Think that the sustainability add as an aspect unavoidable of any analysis of investments. The sustainability, as well as mitigate risks, is profitable.

 

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