Chief economist of MAPFRE Inversión
The stock markets have returned to fine form after taking a breather at the end of January. In a recent interview with Radio Intereconomía, Alberto Matellán, Chief Economist at MAPFRE Inversión, explained that this respite was due to two factors: “The acceleration of the pandemic, and the brakes being applied on liquidity injections. This second factor went largely unnoticed and was caused by the central banks coming to a standstill, along with an adjustment of portfolios.” However, liquidity levels have already recovered to between 100 and 200 billion dollars, and although the pandemic has reached a critical point, “the damage to the economy will be less than was forecast last year.”
On the political and economic front, Mario Draghi’s appointment at the helm of Italian politics has made plenty of headlines. Italy has once again placed its trust in a technocrat and the market has welcomed him, with the Italian FTSE MIB among the best performers in Europe. “The market has welcomed Draghi with open arms, so everything points to it being a good decision.” Draghi will be sailing in familiar waters, given that his time at the ECB involved a heavy dose of politics as well as technical work. Italy needs a ‘whatever it takes’ policy. While Draghi was already recognized for having worked wonders at the ECB, he must now become a virtuoso and weave further magic in Italy. If anyone can do it, it’s him,” affirmed Matellán.
We witnessed an unprecedented market phenomenon in the past week, with Wall Street retailers coming together through social networks to take on the big funds over certain shares, such as those in GameStop. In Matellán’s view, “this has been a somewhat anecdotal case, but there are interesting lessons to learn from it.” He went on to add that “this has happened with a company like GameStop because it is low-liquidity and has a lot of short positions, which is an explosive combination.” What’s more, he believed that “moving a big name like that on a stock market index is very difficult, if not impossible, without upsetting market behavior.” As for the lesson to be learned from this phenomenon, in Matellán’s opinion this was clear: “Short positions are dangerous and liquidity is very important, so the average investor should stay well-informed about what their fund ultimately invests in.” “We mustn’t allow ourselves to get swept up in market vagaries like the GameStop case. The best investments are boring and don’t make noise,” he insisted.
At the macroeconomic level, the services sector has again published some deeply pessimistic PMI figures. Ultimately, though, as Matellán pointed out, this latest survey of those linked to the business world was conducted in January, precisely as the pandemic reached a new peak and new restrictions were announced. “It’s an opinion poll. And we are seeing that the real results are better than those opinions would suggest. This shows that key actors are adapting very quickly.”
In Spain’s case, specifically, data from the tourism sector were published confirming that 2020 was a fateful year. “We are a long way from returning to pre-pandemic activity levels, especially in the tourism sector. But this year, everyone predicts that by the second half of the year the impact of the pandemic will be reduced. If that is the case, we will see a recovery in the travel and tourism sector, although tourism will be different from what we were accustomed to prior to the pandemic,” he concluded.