“The current situation is an opportunity for investment managers to find winning companies at affordable prices”
Chief economist of MAPFRE Inversión
“It’s going to be a particularly interesting earnings season because it’s a special quarter, with the end of lockdown,”said Alberto Matellán, Chief Economist at MAPFRE Inversión, during an interview with Radio Intereconomía’s A Media Sesión program.
“Although the abnormal pandemic situation lingers—and as a result, so does the distrust of investment managers and investors—it’s only normal that the same should happen as with the macroeconomic figures. They will confirm the recovery, but with the caveat of a reality check and without the euphoria experienced in July. The information will undoubtedly be key in revealing which companies are aiming to lead the way and are therefore likely to survive in the future,” he added.
With the spectacle of mergers having begun in the banking sector, investors are now focused on possible movements in the telecoms industry. In that regard, Matellán believes there are two factors underpinning this trend. First, the low prices at which many of the companies are listed; and secondly, the recent verdict of the General Court of the European Union, annulling the decision made by the Commission’s competition authority in spring 2016 that prohibited Telefónica from selling its UK subsidiary, O2, to the Asian group Hutchison. “When it comes to telecommunications companies, European markets are very different from one another and it’s not easy to find synergies between operators. Nevertheless, these two factors open the way so that the sector can seek consolidations at low prices and without as many obstacles from European authorities,” said the Chief Economist.
In the airline sector, the International Air Transport Association (IATA) has warned of companies’ heavy losses as a result of COVID-19 and reiterated that many will require state support to be able to survive. This is nothing new, and we have already seen some bailouts. “The pandemic has changed the way we travel and this is one of the most affected sectors. However, there will always be a winner — a company that comes out on top.” That is why Matellán believes the current crisis, from which agile and quick-to-adapt companies will emerge, “is an opportunity for investment managers to find winning companies at affordable prices.”
Looking beyond news in the business sphere, investors continue to pay close attention to what is happening in the United States. The approval of the fiscal stimulus package has been delayed, but as Matellán explained, although elections historically always generate volatility, this doesn’t necessarily imply significant long-term changes. “Whoever wins, both candidates are planning for strong fiscal stimulus. It doesn’t change the outlook for the next few years,” he added.
In terms of recommendations for investors, Matellán believes now is not a good time for changes, based on market conditions. However, he clarified that investors may be experiencing major changes—caused by temporary layoffs (ERTEs), difficulties associated with the current scenario or simply due to greater levels of distrust toward the future, among other factors—that may well elicit a change in strategy, but always with the help of a good financial advisor.