“If we compare the Ibex with the rest of the European markets, it still has a lot of upside potential”

The IBEX 35 has not shown a clear direction in recent months and has been closing for some weeks in very narrow bands around 9,000 points, but by lifting our gaze a bit and observing the rest of the European trading floors, it can be estimated that it has a long way to go. This is the opinion of Ismael García Puente, fund selector at MAPFRE Asset Management, who points to the upcoming macro data releases as the element that could mark a turning point.

“If we compare the IBEX with the rest of the European markets, we still have enough growth potential.” And if this path has not yet begun, it is because “perhaps we need to see positive surprises in the economy, a certain vigor in the macro data,” García said in an interview on Radio Intereconomía. Another element that could boost selection is the probable increase in ECB rates in the medium term, which are “really important for the Spanish market due to the considerable weight of the banking sector,” which would benefit greatly from such a move. However, the expert encourages not taking it for granted and notes that it could be truncated by news such as the rise in the cases of COVID-19, the tensions with Belarus and Russia, and the rise in the prices of raw materials, which we will have to keep an eye on in the coming months.

The positive outlook for the IBEX is reflected in the European stock markets, of which MAPFRE Asset Management has increased the weight in its portfolio, since their recovery has lagged behind those of the United States and Asia. So “it is logical” that the positive trend clearly shown in places such as Frankfurt and Paris should continue. This idea is reinforced by the fact that the latest business results have generally been positive in the Old Continent, and that, despite the potential interest rate rises, real rates will continue to be very negative, which “historically has been a support for the stock markets,” García Puente explained.

Continuing with this analysis of the global economic outlook, this Wednesday a good retail sales figure was published in the US. But in the analyst’s opinion, this does not have such a clear reading: it could mean that the recovery of the labor market and wages are allowing Americans to spend more, but he does not rule out that it is also due to an early start to Christmas shopping due to the fear of a lack of supplies or that prices will continue to rise. To have a more accurate diagnosis, the expert is waiting to see the data for the coming months, until the end of the first quarter, a date that he considers “essential to predicting the sign of the economic cycle.”

Regarding one of the issues at the center of the economic news, the upturn in prices, the fund manager assured that “everything points to the fact that inflation will continue to rise.” Although “it is to be expected to moderate in 2022,” even if it is due to the base effect. This trend, he insists, means that the market consensus expects a rate hike in the eurozone, although the ECB is still reluctant to do so in the short term. Investors have also been discounting this rate hike by the Federal Reserve, stated García Puente, who expects one or two hikes in the US in 2022.

The rise in real estate market prices is also increasingly the focus of attention, an issue that the expert views with relative calm because he does not see the “irrational” trend of 2007 and points out that the level of loans recorded in the ECB surveys remains stable. Although prices are rising, this “is largely due to the decision of the central banks to keep financing cheaper,” asserted García, who does not share the more pessimistic views on this sector.