Ismael García Puente
Investment manager and fund selector
Stock markets show an optimistic mood, with the German DAX at an all-time high. Meanwhile, the Spanish selective index continues to make progress in the week after reaching year-highs in the last two sessions. Ismael García Puente, an investment manager and fund selector at MGP (MAPFRE Gestión Patrimonial — MAPFRE Asset Management), believes that “The rotation toward cyclical sectors continues,” which greatly benefits the DAX, but also the Spanish IBEX, where the finance sector has an important weighting. “Our medium-term view is positive because of stimulus plans, the vaccination process and the recovery of the companies hardest hit by the crisis,” he added.
“A portfolio balancing strategy and a flexible approach to fixed income and having short durations,”
Meanwhile, the internal rates of return for bonds continue to react to possible inflation pressures. Some investors also see a real risk of the US economy overheating. García Puente believes that “We are in the initial phase of an experiment, in light of the great coordination between fiscal and monetary policy”. However, the MGP expert considers that, “Although there will be an upturn in the short-term for statistical reasons, following the sharp drop in oil prices a year ago, we are seeing longer-term inflation reaching average levels of 2 percent.” What may trouble the market, in his view, is that “The Fed already announced that it will be more permissive of inflation and we’ll have to wait and see what this means.”
The other highlight of the week is the ECB (European Central Bank) meeting. García Puente sees no changes in the macroeconomic scenario that might justify new developments in the field of monetary policy. In the specific case of Spain, Garcia Puente reminds us that MAPFRE Economics expects a 6.1-percent rebound in the year, although the contribution to this growth will mainly occur during the third and fourth quarter of the year.
In this respect, the fund selector recommends striking a balance between those who achieved good results in the pandemic and those who are now recovering after an improvement in profits. “A portfolio balancing strategy and a flexible approach to fixed income and having short durations,” he concluded.