“Corporate results are becoming the most important variable for investors”

Alberto Matellán, Chief Economist at MAPFRE Inversión, explains in an interview for “A Media Sesión” on Radio Intereconomía that this is due “to the greater weight of the banking sector in the Spanish selective, but also mainly to the greater exposure of Spanish companies to Latin America, one of the regions most affected by the pandemic.” However, he says that “all this is already considered and banking, despite being the sector that suffers most from the yield curve or the possibility of default, is already close to landing on the stock market.”

Investors will be looking closely at the corporate results that will be published in the coming days. According to Matellán, this will, in fact, become “the most important variable” and will determine the market’s next movements. But the expert states that, beyond the second quarter results, “what is important is the guidance they provide on future results, because that is where we will see the true ability to recover.”

Along with banking, the tourism sector has been one of the worst hit. Despite the negative outlook for activity, Matellán does not believe that this necessarily means reducing exposure to zero. “It is true that the sector has been badly hit in the circumstances, but it won’t disappear and new business models are being created that will lead to good and bad companies. That is why we must make careful choices in this new context,” he adds.

This week, the Bank of Spain issued its guidelines for overcoming the crisis. Matellán explains that care must be taken when increasing taxes, because a contractionary fiscal policy in a slowing environment could be counterproductive. He also considers it important to seek measures to encourage growth and employment and to provide greater legal certainty for the business owner. And, on pension reform, he sees it necessary “to appeal to individual responsibility if we do not know how the public pension sector will evolve and, in this respect, encourage saving.”

In this ever-complicated environment, many investors may be tempted to readjust their portfolios. According to Matellán, this may be the case for institutional investors, but not for small investors. In his opinion, “retailers only do so under three circumstances: the close of the fiscal year or when they experience a change in their personal (having a child, inheritance, etc.) or equity circumstances.” “And when the portfolio doesn’t perform as expected, in general terms,” he concludes.