The selective layoffs below 8,300 points per year marked by war and the fight against inflation by central banks
It was not a good year for investors. The red numbers have spread across the market and what was presented at the beginning of January as a great opportunity to revalue savings appears twelve months later as the ugly duckling among the portfolios.
There has been no refuge for anyone, except perhaps energy commodities or the same bank accounts, where deposits are beginning to glimpse some profitability in the heat of rate hikes by central banks, the big players.
But the balance of most stock market indices will be negative at the end of 2022. And, in an almost unprecedented event, this situation was accompanied by a general fall in the price of bonds, with a 16% drop in the Bloomberg Aggregate Index (an indicator that groups the price of government bonds of the major economies of the world) .
The summary of the year is clear: everyone loses. The risk takers and the conservatives. In fact, the latter are the ones that have suffered the most from historic reds. It’s not for less. No one could have predicted the outbreak of war in Ukraine and the energy crisis. Nor the abrupt end of expansive monetary policy to combat runaway inflation, whose dizzying speed quickly caused panic as a result of the economic recession. In this environment where ‘uncertainty’ is the key word among asset managers, the Spanish stock market managed to resist with a limited fall of 5.56% for the Ibex-35 built up during the year.
So the selective rejects this unusual 2022 at 8,229 points – after losing another 1% on Friday – a far cry from the 8,713 the year started with, but with far less aggressive losses than those in other world-class stock markets. In Europe, the average falls are more than 10%. But worse was the balance sheet for Wall Street, which yesterday closed its worst year since 2008 at the height of the financial crisis. The declines are more than 10% in the Dow Jones, but they skyrocket to 20% in the S&P 500 and more than 36% in the Nasdaq, the indicator that groups the big tech stocks.
The red numbers would undoubtedly have been much larger in the Spanish stock market, were it not for the Ibex-35 playing with a clear advantage over the rest. In the same way that it was affected by the sheer weight of the tourism sector during the pandemic, this 2022 was supported by banks, one of the sectors with the highest representation of the selective and undoubtedly one of the most benefited by the environment of interest rate hikes.
With the increase in the reference rate by the European Central Bank (ECB) from 0% to 2.5% in just five months – the increases started in July – listed financial entities have led the rise in accumulated annual interest rates. CaixaBank was the most bullish asset of the year (+52%), followed by Banco Sabadell (+48.8%). Bankinter also added nearly 40%.
On the other hand, the biggest declines for the year were accumulated by Fluidra (-58.75%), Rovi (-51.13%), Cellnex (-39.58%), Grifols (-36.19) and Colonial ( – 27.15%).
Strong positions in several energy-related stocks also helped offset those declines. The case of Repsol stands out above all, with a 42% increase in a year in which the price of a barrel of Brent went from $79 to $84. It’s a 6% increase that adds to the 60% that skyrocketed in 2021. But they are undoubtedly much more moderate levels than the $130 reached in March, just after the outbreak of war.
The movement also comes in a year marked by the ‘currency effect’, with a strong revaluation of the dollar that even caused the euro to lose its parity with the greenback.
With a view to the upcoming sessions and the start of the new financial year, caution is again the most important recommendation among managers. The consensus expects it to be a much quieter year for equities, which will gradually gain ground. They see more opportunity in fixed income given that interest rates will hit a mid-year ceiling, giving the bonds more travel after the abrupt 2022 adjustment.
Bankinter’s analysis department also believes that the war in Ukraine has lost some of its “ability to influence the market”. And always with the utmost caution, they indicate that “the binomial return-risk ratio allows for more favorable outlooks for bonds and equity markets” for the coming months. A year that will again be dominated by central bank decisions.
Source: La Verdad
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
