In his weekly appearance on the program A Media Sesión on Radio Intereconomía, Alberto Matellán, Chief Economist at MAPFRE Inversión, noted that there has been a massive flood of liquidity from central banks and that this justifies the levels being reached in a context where more is being paid for expected profits, because there is more money.
“Despite the difficulties that remain, investors and analysts are seeing that the damage from the pandemic is behind us”
He referred to the support of recovery prospects announced yesterday by the International Monetary Fund (IMF), raising its forecast for world economic growth in 2021 from 5.5 percent to 6 percent, thanks to the boost from the US. The MAPFRE expert shared these forecasts, coinciding with the consensus of analysts, and noted that they are also being revised upward on an ongoing basis.
“In less than two months, it’s gone from an expected growth environment of 4 percent to 6 percent, a jump that is rarely seen,” he explained. What is most striking, he added, is that Europe is experiencing the same phenomenon, with less stimulus than in the US and a vaccination process behind this leading country.”
“In both cases, we’re seeing economic data well above what we expected,” he admitted. “This shows that, despite the difficulties that remain, investors and analysts are seeing that the damage from the pandemic is behind us.”
Proof of this is the recently published composite PMI (Purchasing Managers’ Index) in the euro zone, which came in at 53.2 in March, compared to the expected 52.5 and the previous 48.8. Matellán believes that “the trend will continue, because data like these are interesting” as it shows a direct survey of people who are involved in the daily workings of the real economy. Returning to the US, he recalled that the ISM, a manufacturing index and the same type of indicator as the one previously mentioned, reached its highest point in more than 35 years last week. “These are good signs and agile data, but they are still forecasts,” he said.
During the interview, Matellán also alluded to the upcoming corporate results for the first quarter, which analysts are awaiting as if it were a windfall, hoping that they will confirm what was already indicated in the previous quarter: that the damage caused by the pandemic is less than expected for companies. The expert bet on prudent companies, because the margin for improvement will be greater.
With regard to IPOs, he recommended refining the analysis to “separate the wheat from the chaff.” With the same philosophy, he recommended that private investors delegate the construction of portfolios, unless they have specific knowledge. “They’re working wonderfully, and sometimes there’s a temptation to modify them, when they are specifically developed by advisors such as those at MAPFRE Inversión to maintain profitability through different trends,” he summarized.