The expected ‘return to normal’ in China despite the increase in infections may lead to investment opportunities in industrial raw materials such as copper, aluminum or iron. The increase in demand from the population and the production of factories in the country makes these ‘commodities’ more attractive in the short term, according to Inverco. Although she is bullish on the Asian giant and overweights the country, the manager warns that her growth prospects are still uncertain.
The pandemic and the global semiconductor crisis have highlighted the importance of not depending on third parties in certain key sectors, a situation in which China will experience a reduction in exports in order to favor domestic consumption.
Invesco’s head of sales for Spain and Portugal, Fernando Fernández, highlighted the “good time” to invest in this type of asset, especially gold, in an environment of high inflation like the current one. In this sense, the manager opts for a high profile on fixed income in the short term, despite the ‘annus horribilis’ that it has gone through in 2022, while underweighting the variable.
The firm considers that there may be a downward revision of benefits, although it will not be “dramatic”. He mentions, for example, the technological ones, which are immersed in a review of the workforce and operating costs. On the contrary, it highlights the ‘utilities’ and health sectors, which have the capacity to pass on the price increase and, therefore, their margins are not so affected.
Less “aggressive than expected” rate hikes
Regarding the direction of monetary policy this 2023, Invesco believes that the worst of the storm has passed and that the Reserve Thus, Fernández considers that they will be less “aggressive” than initially expected, under the premise that inflation will end up eroding the demand and reduce savings, especially in the Old Continent. Although a global economic slowdown has occurred, he believes the chances of a recession are slim and if it does occur, it will be short-lived.
In the least likely scenario, the firm contemplates persistent inflation which, in this case, would force central banks to be much more restrictive. The key will be in the evolution of the war in Ukraine, which is on its way to completing one year, and there is still a lot of uncertainty surrounding the conflict.