Investor confidence remains strong

The confidence of Spanish savers, which began at the beginning of the year, strengthened between April and June. Russia’s invasion of Ukraine and the economic consequences it wrought – inflation, problems in supply chains, and accelerating interest rates – have soured investor moods in 2022. Little by little, as the economic and energy situation returns to normal – the war is still entrenched – and stock markets regain the air, optimism has been permeating the market.

In fact, the index prepared by JP Morgan Asset Management and published exclusively by EL PAÍS, It settled at 1.97 points, slightly higher than the level it was in last March. This index is composed with the responses of Spanish savers (1,358 interviewed in this wave) to the question of how the stock market will develop in the next six months. 41.4% declare that they are optimistic (they see a rise in the stock market as “possible” or “very likely”), and 33.5% are tepid (they believe that stock market indices will remain at current levels), while pessimists, who bet on a market decline, represent only 25.1% of the total.

economic improvement

Bullish investors cite some reasons why they see the bottle as half-dented. Among them, the argument that “there is an improvement in the current economic situation” stands out. There have also been a few references to the fact that the situation in Ukraine “isn’t going to get any worse” or may end the Russian invasion soon. On the other hand, pessimists say that “we are in a crisis” and that “everything is too expensive.” Same reality, two diametrically opposed visions.

Where do Spanish savers think there is more potential for revaluation? My favorite stock market for the upcoming semester is the European market (29.2% of mentions), Spanish stocks rank second in preferences of those surveyed (24.1%), followed by Asian markets (17.8%). The US stock market’s massive drop is significant, as only a quarter ago it was where the greatest potential was seen, and it now drops to fourth place, picking up just 16.7% of the total.

Despite the confidence citizens show regarding the immediate future, the truth is that when it comes to talking about their money, bets are much more conservative. 43% of respondents to the American Fund Manager’s Quarterly Report acknowledged that their main investment goal is “not to lose money.” 31.2% indicated that they are willing to sacrifice part of the potential profitability “in exchange for some securities”. While those seeking “maximum profitability” account for only 25.8% of the total.

This conservatism in the preferences of Spanish investors is usually quite stable, regardless of the stock market and the economic cycle it is going through, and this is reflected in the composition of their investment portfolios. Banks have not launched (and do not appear likely to do so in the short term) a liability war. However, and Although the returns offered by the entities are far from offsetting inflation, the next semester’s star product is still paid-for books, deposits, or accounts (41.5%). In second place in citizens’ preferences are investment funds (16%), followed by retirement plans (15.3%), direct investment in stocks (12.6%) and fixed income (including treasury bills). Only 11.3% bet on real estate assets.

a more “constructive” vision

The domestic banking crisis in the US has put the markets on edge. With the Ukraine problem still unresolved, problems in the financial sector added more uncertainty and brought the possibility of a recession closer. After three months of this warning, the situation calmed down. This is why our vision is somewhat more constructive than then. We hope that there will be global growth. It will be modest growth, but we think the potential for a recession in the short term is fading,” says Lucia Gutierrez Melado, Chief Strategy Officer at JP Morgan Asset Management for Spain and Portugal.
The fund manager acknowledges that the US economy has “surprised us again” thanks to increased exports and, above all, household consumption. “It is inevitable that interest rate tightening will end up in consumption. However, in this economic cycle, unlike others, households are not over-indebted,” notes Gutierrez Melado. As for inflation, this expert believes that the numbers are “going in the right direction”, but it is still far from the target of the central banks (2%). “It’s worrying that we’ve been in a prolonged period of continued inflation and we think central banks are still saving some rate hikes,” he explains.
While last March the American company revised its strategy to slightly reduce the weighting of shares, its vision is now somewhat more neutral. Stylistically, he believes we are in a market moment where defensive and growth stocks must be mixed. “The asset we still like the most is long-term public debt, especially the United States,” he adds.

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