Variable income has experienced a brilliant first part of the year that has helped them recover their tone after the fateful 2022 with growth above 15%. A rise that Dunas Capital considers to be distorted by increasing the thickness of this ‘rally’ by less than ten values. “The stock markets are not going up, only some companies are revaluing,” says the investment director of Dunas Capital, Alfonso Benito Domingo. In a meeting with the media, the expert has warned of the “concentration risk” of certain values, which have such a high representation in the indices in which they are listed that they can determine their behavior.
This is the case of the ‘magnificent seven’, a name that refers to Apple, Amazon, Alphabet, Microsoft, Nvidia, Tesla and Meta. The ‘rally’ experienced by these values has pushed the Nasdaq to a historic semester, in part, due to its weighting, which represents half of the technological index. In fact, the New York Stock Exchange has announced changes in the composition to reduce its weight. In the Old Continent, this situation is led by the luxury goods conglomerate LVMH or the chip giant ASML.
This is one of the reasons why Dunas Capital underweights equities and opts for a defensive approach, away from sectors that are currently priced high, such as those dedicated to discretionary consumption or technology focused on the health area, known as ‘Medical technology’. On the contrary, they see value in companies in the pharmaceutical, telecommunications, integrated oil or ‘utilities’ sectors, while they have abandoned the automobile sector, except for Mercedes, their margins remain “solid”.
They now see more value in fixed income, especially after the recent rise in interest rates and it is being postulated as an “interesting option”. In this sense, José María Lecube pointed out during his speech that they have US state debt in their portfolio and that they are considering including Europeans as well, without a specific preference for a particular country. In this regard, they have highlighted the opportunities offered by bonds issued by financial institutions given the sector’s need to strengthen its capital and the reduction of the ECB’s balance sheet. “Following Credit Suisse, we have taken the opportunity to sharply increase our exposure to financial credit, especially seniors, which has raised our average ‘rating’ to BBB, reduced to corporate bonds,” he underlined.
A “bigger” recession than expected
Their investment strategy rests in a context due to the rise in prices, in whose central scenario they manage persistent inflation that would lead to further increases in interest rates or to keep them high for a long time, a decision that could lead to a recession “greater than expected”. And With Fiscal Policy “Quite Exhausted” the rate cuts by the ECB and the Fed.
Short-term inflation expectations moderate, while medium- and long-term expectations remain anchored in the . The key continues to be in the labor market, which is showing signs of strength both in the United States and in the euro area and unemployment remains at minimum rates after falling below 6% in the single currency region, while in the country the American is located at 3.7%.