Todd Jablonski, Chief Investment Officer (CIO) of Main Globalconsidered that one of “the most effective currency” to be able to protect the inflation investments and rising interest rates are the capital markets.
“The shares are at nominal prices, they obviously include inflation, so perhaps I would recommend capital, which is where we always position our multi-asset portfolios in order to prepare for this environment of rising inflation,” the head of investment management in Main Global.
In addition to this, there are also debt markets where a real return can also be achieved, as well as real assets, such as infrastructure and real estate, while inflation continues to rise.
In USAinflation in April stood at levels of 8.3% per year, while in Mexico it was 7.68% at the annual rate for the same period.
Although US stock indices remain in negative territory this year, with the nasdaq falling 27.88%; the S&P 500 yielding 18.20%, the industrial dow jones down 13.93% and the Mexican S&P/BMV IPC down 3.39%, over time investing in stocks is usually an alternative to overcome inflation, he explained.
“Overall, I think the US stock market is still a lot lower than it was last year (but is) positioned to rebound from these levels and we’re going to offset that going forward.”
However, Todd Jablonski He stressed that there are very special characteristics that are only available in the US capital market, in particular, the presence of technology companies worth trillions of dollars.
“I think of sectors as relative in terms of how we mix capitals, many times we use a reference to be able to make these sector decisions for capital allocation, I believe that technology is the key sector at this time for future growth,” he explained.
However, he warned that “you have to separate the technology that is profitable from the one that is not going to be profitable”, for example, technology giants such as Google, Manzana Y amazon they will continue to give profits, but returns can also be increased by paying dividends.
Regarding the Mexican market, he said that interesting “stories” can be found, but above all if there is “good diversification” returns are achieved. In addition, Mexico’s proximity and economic relationship with the United States give the market unique characteristics than the rest of Latin America.
“We have seen many foreign institutions that already see much more of the Mexican capital market,” he considered.
Investment Director at Main Global stressed that there are external factors to consider, such as the war in Ukraine and that the majority of the countries of the developing world have already exhausted all the stimuli to inject growth into their economies.
“If we see the conflict in Europe and compare it with historical examples, I think that what we are seeing today fits with this pattern of recovery, but I also think that science has to be applied to this equation, separating the effect of one thing from another because it also there are some limitations in the oil market, also money supplies, inflation concerns”.
Todd Jablonski considered that, at this stage, the covid-19 pandemic It is no longer in the “top three” of investors’ concerns, rather inflation, interest rate hikes and pressures for world economic growth, but also geopolitical risks.
“The political changes that we have seen in many places in the last three years, it is definitely a change from the dynamic of previous decades, which makes it relate to Russia. We begin to see how companies revalue, we begin to see a little that companies revalue how to continue with their business. Everything is changing,” she commented.
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