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Russia’s invasion of Ukraine evaporated the confidence of Spanish savers and investors in the development of stock markets six months ago. It is also reflected in the monthly details of .’s confidence survey JPMorgan Asset Managementpublished exclusively by EL PAÍS, March marked a turning point as it experienced the largest declines (-3.7 points) in citizens’ belief in the potential of stock markets.
This collapse puts the index – similar in scale to the one that occurred in March 2012, during the sovereign debt crisis in Europe, or in March 2020, when restrictions were imposed around the world due to the outbreak – a 13 straight months of optimism With regard to stocks. On balance in the first quarter, the index remained in the positive territory (0.69 points) due to a good start to the year witnessed by the stock markets, which encouraged savers.
As happened with the outbreak of Covid-19, the war was a scenario that investors did not consider in their accounts weeks before it happened. Thus, last January, none of the 1,300 participants mentioned the geopolitical situation in Europe in their analysis. about the possible development of markets; And yes, instead, he highlighted inflation and energy prices as the main concern. Specifically, price development got out of control after the invasion, especially energy prices (electricity, gas and oil). After many years of inflation asleep, the CPI has exceeded any expectations. The fear now among savers is whether central banks will be brave enough not to respond to rising inflation raise interest rates faster than expected. This tightening of monetary policy would add more pressure on economic growth.
As for the development of stock markets by region, the opinions of the Spaniards are mixed. In any case, it is remarkable that the market in which savers see the greatest potential is Europe (29% of notes), because the Old Continent is the most war-prone and also has Heavy dependence on Russian oil and gas. The second market in investor preferences is the United States (22%) and the third is the Spanish market, which is chosen by 20.6% of those surveyed. For their part, Asian stock markets continue to lose their attractiveness, and only 19.4% believe they will have a positive behavior in the next six months, compared to 35.4% who chose them as their first choice in 2020, when this region led the recovery. Post-pandemic economy.
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products
With regard to the future intention to invest in financial products, the trend that started in the previous waves which assumes a decrease in deposits and savings accounts among the preferences of investors is preserved. Since 2018, the decline in intent to use these conservative products has been nearly 10 percentage points, from 45% four years ago to 35% today. Despite this drop, and considering that passive products hardly gain anything in a scenario that inflates around 10%, the number of savers who would rather lose purchasing power than take risks to get returns is still very high.
Finally, willingness to invest in funds fell three points (20% versus 23% in the previous wave), while it fell in retirement plans by two percentage points. Expectations for direct investment in the stock market are also dropping, albeit slightly.
Less growth, but no stagnation
The question all customers ask us is whether there is a real danger of the economy entering a recession, with the Russian invasion of Ukraine and rising inflation. We do not see this scenario. It is true that we have lowered our growth forecast for this year, but for the time being we are ruling out a recessive scenario,” commented Lucia Gutierrez Melado, chief strategy officer at JP Morgan Asset Management in Spain and Portugal. In his opinion, one factor for optimism is that spending continues to show signs of strength, whether In household consumption or in the investment rate of companies, since during the epidemic large wastes of money have accumulated.
From the US fund manager, they consider that this low growth, especially in the early part of the year, will be more pronounced in Europe than in the US. Regarding inflation, Gutierrez Melado admits it will remain at high levels “for much longer than we initially expected”. In this sense, he believes that central banks will continue to normalize their monetary policy “although maintaining a balance between the fight against inflation and economic growth”.
How do all of these expectations translate into JP Morgan AM’s investment strategy? Since the end of last year, we have reduced the risks in our investment portfolios. A few months ago we were gaining a lot of weight in stocks and now our position is neutral. When there is more clarity regarding the impact of war and inflation on growth, we will re-evaluate our strategy,” concludes Gutierrez Melado.
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