Two stock traders, on Tuesday on Wall Street (New York) .ANDREW KELLY (REUTERS)
The viral distress continues and will continue for a while longer, but 2021 will go down in history as the first year of post-pandemic recovery. Both in the macroeconomic and in the trading floors: the sum of all the Stock Exchanges in the world is worth twice as much today as in mid-March 2020, a few days after the health outbreak forced the world to retreat into itself. Markets plunged in anticipation of what was to come, the biggest synchronized recession of the modern era. However, in the year and nine months that have elapsed since then, the outlook has completely changed: after the economic wreck caused by the confinements - and the consequent blow to the income statement - equities have taken advantage of the rebound in all indicators to shine again with its own light.Neither the summer scare of the delta variant of the covid-19 nor that of the omicron in this final stretch of the year have been able to disrupt a clearly upward trend in the long term.
The healing of economic wounds is still incomplete in several of the main countries on both sides of the Atlantic - Spain is the best example of this - but episodes of volatility aside, investors in shares are living days of wine and roses. In 2021, corporate profits have soared and the main New York index, the S&P 500, has closed the year with an accumulated profit that is close to 30% since last January 1. The entry of money into the market has also allowed it to beat its historical record in one out of every five sessions of the year, a milestone that had not been reached since 1994. Although also notable, performance has been somewhat more timid in Europe : the Eurostoxx, which brings together the 50 largest listed companies on the continent, scales more than 20%; the Italian FTSE Mib scores 23%;the German Dax rebounded 16%; and the Spanish Ibex 35, a meager 8%. Among the large selective on the continent, the French Cac is the one that does the best: it rises 29% in the year.
With inflation rising in tone and central banks beginning to tighten the monetary policy rope, the balance between fixed income and equities is clearly shifting in favor of the latter. The contrast, in fact, could not have been greater in the year that is about to end: from stock markets at highs - the Spanish one is, for yet another year, the great exception to the rule - to bond markets that have closed their worst year in more than two decades. Furthermore, nothing portends a change in trend in the coming months, in which the senior staff of investment and pension fund managers, the big names in world banking and analysis houses are betting on stocks to the detriment of debt or liquidity.
As analysts at the Swiss investment bank UBS recall, the cocktail of clearly rising inflation - in Spain it has closed 2021 at its highest peak in three decades, a general trend in rich and emerging countries - and yields on public debt and Private at record lows can only mean a destruction of wealth for those who deposit their money in high-quality bonds or, in the worst case, in cash. "To protect their savings from inflation, investors should opt for stocks, which in this environment offer an advantage over other asset classes", remarked along the same lines Nigel Bolton, co-director of global investment and head of variable income BlackRock's European Union, in a recent note to clients.
The bar for bags is high and to exceed the 2021 harvest next year will not be easy. But the optimists' reasons remain intact. First, because as Joachim Fels, global economic advisor to the US giant Pimco, recalls, the economic damage from each new wave of the virus is less and less thanks to the vaccine. Second, because banking and securities most exposed to tourism and services, the most battered in a fateful 2020, cannot but improve in an environment of moderately rising interest rates and fewer restrictions on mobility. Third, because both global supply chains and energy prices, the two biggest headaches in recent times for industrial and distribution companies, are beginning to show signs of relaxation.
“For next year, the outlook is for very good economic growth, inflation that will gradually moderate and interest rates that will continue to be negative in real terms for a longer time: it is the idyllic scenario for those who invest in income. variable ", says by phone Leopoldo Torralba, deputy chief economist of the economic analysis firm Arcano Research. Despite the accumulated rise in the second half of 2020 and in 2021, he remarks, “the multiples at which the Stock Exchanges are listed remain at reasonable levels: except for US technology companies, the majority of shares both there and, above all, in Europe, they are not exaggeratedly above their historical average ". However, Torralba foresees increases "more tempered" in 2022 than in the year that is coming to an end. And look, this year yes,a greater journey in the equities of the Old Continent than in the first world power.
The Ibex is off the hook from the rest of Europe for another year
It cannot be said that it has been a bad year for the Spanish Stock Market in absolute terms: a rise of 7.93% is by no means negligible.
In relative terms, however, the luster is almost completely lost: compared to the double-digit increases in the rest of the major cities in the eurozone (Frankfurt, Paris and Milan) and London, which is almost 15%.
It also remains clearly below the level at which 2019 ended, before the pandemic broke all the schemes.
The reasons for this worse performance of the Madrid parquet, a constant in recent years, are multiple.
Spain is on the way to being the economy of the Old Continent that later regains its pre-crisis level of activity, and that weighs on the minds of some foreign investors.
It also affects the composition of the index, in which the weight of technology companies - those that have weathered the storm the best - is negligible and in which both tourism - the sector that is suffering the most from covid-19 - and banking - which It has had a much better year than 2020 but continues to suffer from low interest rates - they are overrepresented.
Exposing many values to Latin America just when many countries on the subcontinent are having serious difficulties escaping the pandemic hole is not the best credential either.