How do you value these first months of the year in the markets?
The truth is that the general valuation is positive. Obviously, then you have to enter what development has been in these four and a half months, but in general terms and also, both for the markets of renta variableperhaps with an important nuance, such as the markets of Fixed incomeWe believe it is being a positive year. There are aspects that it is true that we have surprised us, both the fixed income and variable income markets, but the balance we have been in these four and a half months, we continue to think that it is positive.
Surprises? We have been surprised, perhaps, the profitability differential of behavior that we have between European markets and the rest of the world. Perhaps it was something that the market had been announcing in recent years, especially for the extraordinary behavior of American markets. And it is true that at some point that behavior should be closed, that gap that has occurred and that has been opened should be closed and this year is the year. Perhaps now what is needed is that this good relative behavior of Europe will be justified with some Valuations
And then perhaps in the markets of Fixed incomeyes for us it has been a surprise. The best American debt behavior than European debtwhen at the beginning of the year the expectations were different. In Europe, perhaps more types of types, in the United States less, and in the end what we have had is disparate behavior. We will see what remains of the year, the truth is that challenges will continue, we will have volatility, Trump is what produces in the markets, but hey, We believe that the market fund is still good.
This tariff uncertainty, do you think it benefits or harms Europe?
In general terms it does not benefit; that is, we believe that in fact It harms Europebecause in the end he practically harms everyone. A tariff war like the one we are living, or as the one that had been announced in early April, we will see how it ends, because I believe that it is true that what was said in early April, how it will end, we believe that there will be an extraordinarily significant difference.
There is a factor that we believe that benefits Europe, and that is that normally, from the construction of Europe, and especially in the last crises it has lived, there is a saying that I think makes a lot of sense, and that is that it is that Europe is built in crisesit is built from difficult times. And I believe that Europe has spent a difficult time, in recent years, and most likely, with Trump’s choice, all those fears there were, even uncertainties, have been reflected in the market. That has meant that certain countries make really important decisions that, probably, in some cases touch the pillars, say, even their constitutions, as has been the case of Germany. With which, Europe has taken an important turn, and above all Germany in terms of investment, in terms of public spending, in terms of infrastructure, in terms of defense, and that we believe that it has been one of the factors to dynamit and energize in the medium/long term part of the economic structures and European economic sectors that were perhaps more ankylosed.
So, probably the issue of tariffs is much less than announcedsome victory will have to have Trump, that we have no doubt that some benefit will take, and that benefit will probably go against the rest of the world, but we also believe that those factors of the economy that have made Europe arouse will also have their positive aspects.
Why do you bet on your portfolios?
We still have in mind, I would say, for approximately around two, three years, Financial sector We believe that it is still one of the sectors that has benefited the most and continues to benefit. Yes, it is true that it has a handicap already and are the valuations that, in many of the cases, we already see in some components of the financial sector indexes and, fundamentally, of the banking sector. We must not forget that, in the end, for very good prospects that a sector may have, or even a certain component of the index, a bank, in this case, in the end, everything has to be justified, everything has to be supported by an assessment. And in some cases the assessments of the financial sector begin to be certainly adjusted.
Then, obviously, we also have the sector pharma as a defensive sector, to interesting valuations. The sector in Europe, also the car sectorwhich is a sector that, probably, at some point, we realize what has been done in Europe with the automobile sector. Probably, tyrants stones against our own roof in relation to the issue of electric vehicles. The valuations of many of these companies seem to us that they are certainly attractive.
And then, it was about what would be the European market that, perhaps, is probably the one that, for the remainder of the year and whenever it is met, say, those expectations that the market is putting on the table, outside the sector or outside the geographical area of Europe, we believe that There are still opportunities in the United States as the main market. We keep thinking that Medium and small capitalization companies That they were the great, to put it in some way, the great surprise, or the great expectation, or the great hope that there was in the American market at the end of last year with the choice of Trump and leaving, say, aside the great companies that by valuations and others, because much of the market, say, discarded. That type of companies believe that the whole potential continues to have if the cycle is maintained and thanks to the valuations there are. And within the Great Companieswe are still quite demanding still with the valuations, we remain a bit on the margin and although they can continue giving results and teaching the market, positive numbers, we believe that the valuations in some cases are relatively demanding. With which, we are a little out.
Have you made rotations?
The rotations, throughout this year, We have taken advantage of the falls we saw throughout April to make more bets For these let’s say, bets we had, these movements. That is, we have not assumed us a significant change in what we have lived in this year, but simply to have taken advantage of the falls that we have lived at the beginning of April to continue redoubled the bets in the sectors that we have found as fundamentally financial sectors, Pharma, some cars and then the American part of small and medium -sized companies.
What are your prospects for the market?
Obviously taking into account what happened in the market in these last weeks, that we must not forget that we come from a month and a half where we have seen some falls of around the 15-20% For some markets in practically two or three weeks, but then we have seen a recovery of the same intensity in the latter.
We believe that We are in a moment I think it’s very important marketperhaps, and for the European market Specifically because what we have right now is to capture those expectations. For us the results that we begin to know throughout the summer, the results of the second quarter where we will already have the possible impacts that the tariff war announced and then with what it has meant for many sectors of practically a break in investment plans, negotiation plans, mergers and purchasing projects of companies.
We believe that those results that we see, mainly throughout the month of June, they are going to dictatemost likely, What we see in the second part of the year. If these results are still positive, as the market discounts, we could have another very good year in terms of profitability for variable income markets and perhaps with greater, let’s say, importance for European markets as it is being at this start of the year.
For him rest of markets Well, something very similar. We believe that Good momentum From the market that had practically the general indices, global indices and companies, we believe that it is necessary to see what the real impact on the second quarter of all uncertainties related to tariffs, but that is something that until the beginning of July we will not be able to see it will be embodied.
We continue to trust the market fundIn the economic situation, the macro part we believe that continues to accompany, continues to accompany in the United States, in some areas of Europe in a more important way and in the areas where we had stayed behind in Europe such as the Germany part and others, we trust that with these plans this growth data can be accelerated. With which, the fund is still good, but once there has been that positive profitability, it has to be confirmed with the publication of the results we see in July.