Wed. Apr 24th, 2019

Polarization of valuations

Polarization of valuations


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MadridUpdated:

The behavior of the bags in the first quarter of the year it has been very positive. After a difficult closing of 2018, in which some of the wounds of the crisis were reopened, the start of 2019 has been extraordinary.

This strong recovery is based mainly on an improvement in the perception of risk, because in these three months some or all of the fears that last year have been dissipating in whole or in part. On the one hand, the geopolitical risks, which, more than having been fixed, have stopped contemplating the possibility of a disastrous outcome. On the other hand, the macro fears have been reduced that were imposed in the final part of the last year. The economic data, without being good, do not anticipate the derailment that seemed to be putting the market in price.

The world grows less than it grew, but it grows. Therefore, it is possible to think that the causes of economic slowdown they are more conjunctural than structural. In the coming weeks we will see if the stimulus measures of the Chinese economy are effective or not, if a Trade agreement between Trump and China, and how all this affects world trade. And yes, Europe, as Draghi rightly says, has been a stumbling block along the way.

On the other hand, we must highlight the strong polarization that has occurred in the valuations of the European and Spanish Stock Exchange. On the one hand, the companies with the most predictability of cash flows -electric, pharmaceutical and infrastructure- are quoted at the top of the range of historical valuations, which is quite logical in the new environment of interest rates. On the other hand, companies that are perceived as more sensitive to the cycle -hotels, car components, socimis, promoters and banks- are quoted at ridiculous multiples. To the extent that the fears we have discussed are dissipated, these companies are the ones that should best behave.

The bags will continue to move data heat that are published. If it is confirmed that the deceleration is not enough to write home, the indexes will continue to rise and the sectors that have done the worst will recover the lost ground. Some valuations are only justified if we were on the verge of another great crisis. And not.

JOSÉ RAMÓN ITURRIAGAJOSÉ RAMÓN ITURRIAGA

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