The script behind the best investment decisions

Doubts about the behavior of financial assets in the coming months are logical if we look at the geopolitical situation that extends from last year. They are also reasonable as inflation continues to play its game. And they are the result of the necessary prudence, sharpened in recent weeks due to the turbulence triggered in the financial market. Tensions that have led to some fear of mass contagion at the international level.

The head of investment strategies in BBVA private banking in Spain, Álvaro Manteca, put the latest risks in black and white, but also macroeconomic scenario and uncertainties that will remain throughout the year. He did so at a digital meeting organized by La Voz, in collaboration with BBVA, which highlighted the economic outlook for 2023. The session, which also included interventions by Marina Pérez Razquin, Director of Private Banking for the Territorial Northwest of BBVA; and Patricia de Arriaga, Pictet Asset Management’s Deputy General Manager for Iberia and Latin America, provided the main keys to making the best investment decisions.

Regarding the first quarter of 2023, Manteca explained that “BBVA Research has just revised its global growth forecast upwards to 2.8%, from 2.3% previously.” Specifically, in the case of Spain – he added -, “we thought we would grow by 1.2 and we raised it to 1.6 percent”. The same is true for the eurozone, which left “situation of practical stagnation” to “slight” growth estimated at 0.6%. However, recent tensions in the financial system have “cooled” investors’ optimism. Despite everything, Manteca pointed out: “We think that economic growth will be maintained, we do not foresee a severe economic recession, we do not see it, neither in Europe nor in the United States.” Regarding inflation rates, he indicated, “they will clearly go down”, and regarding the role of central banks, he is convinced that they will “stop the process of monetary tightening in recent months”.

The American central bank announced last Wednesday an increase in the interest rate by 0.25 points, a lower percentage than expected. “The evolution of interest rates will condition the rest of our behavior,” but he insisted that “from BBVA we think inflation will clearly fall, with the trend extending throughout 2023.” The development, he predicted, “unfortunately will not be linear, we will not have a fall in inflation every month, but in some cases there will be shocks”.

Therefore, with prudent moderation, when highlighting clues about the best investment alternatives, the director Private banking in the northwest area of ​​BBVA, cited megatrends as one of the big opportunities because of their “high-quality risk-adjusted returns.” Segmented into assets related to environmental impact, demographic changes, consumption and lifestyle or technological trends, these are investments “that represent a very interesting long-term alternative to achieve profitability.” With these investments, Pérez pointed out, “we seek to capture growth, identifying companies and business models that are positively affected by these trends.” An investment that requires long-term exposure to generate a higher return than would be achieved with one using a traditional benchmark.

cyber security

One of the hot megatrends is cyber security. For this reason, the deputy general manager at Pictet Asset Management emphasized the great investment opportunities they represent. De Arriaga pointed out that they are “linked to the development of the Internet”. Its impact will be greater in the future because of “all the innovations that are embedded in the penetration of the Internet and that will require security solutions.” 5G, the Internet of Things or quantum computing are examples of a new development model that will grow in the medium term. “The Internet of Things This will enable 100,000 million devices to be connected on the planet in 2050», he pointed out, talking about a “very broad” field of activity, from the aforementioned Internet of Things, to urban infrastructure, security in electoral processes or in military installations. In terms of investment opportunities, cyber security represents one of the fastest growing trends. It includes data generation, cloud storage, electronic payments and personal data security. Companies, said De Arriaga, “will spare no expense to protect their data. It is one of the topics with the highest visibility and progression in the medium and long term.” Long-term investment, with diversification and according to the risk profile. “Our main mission,” said Pérez, “is to find the best opportunities within the framework specified by the client.” Closeness, dialogue, trust and the ability to provide them with security is our trademark.

Diversified trends, in the medium and long term and outside the economic cycle

Having overcome the turbulent year 2022, taking into account geopolitical factors and the economic environment, the private banking area of ​​BBVA will continue to promote its strategic plan. Accordingly, the director of the Northwest Zone assures that “this is a key area for the group” and therefore the focus will be placed on “the upper part of the segment, in the high net worth unit”. Currently, the division manages EUR 16,400 million, with 12% more balance in 2022 than at the end of 2020. In addition, private banking will receive a new boost by including more than 43,000 new clients. “All of them will receive our services and the attention of our specialized staff”Perez said.

As for the evolution of BBVA’s private banking business, its head in the Northwest Zone was “satisfied” after reaching assets under management of 100,952 million euros at the end of 2022 and with the number of clients reaching 109,290. In the case of Galicia, the entity manages 4,370 million euros, 4.3% of assets at the national level. Its staff has also grown in recent years, currently reaching 678 people across the country. The North-West territorial delegation consists of 86 professionals.

Recovery

The expectation for 2023 is recovery. The prognosis Manteca argued by citing three main factors. The first, that of economic growth“which will be less than last year, but it doesn’t seem like it will collapse”. The second, related to inflation “which will clearly go down, that is our clear expectation”. And, the third, connected with central banks. “They will stop raising interest rates and we will have a much more stable scenario from a monetary point of view,” he predicted. Not forgetting, “that the risk scenario is still complicated.” For this reason, he recommended “very appropriate diversification and a long-term investment horizon”.

From Pictet Asset, its chief executive officer advocated “Bet on mid-term and long-term trends, on transforming forces in a satellite way, because they will give greater stability to our portfolios.” A decision above the economic cycle, always complex and changing.