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Falling Risk

Pablo Santiago asistió a la reunión anual de Citywire en Montevideo

As we entered the second day of our event, I was able to catch up with Pablo Santiago from Argentine firm Banco Mariva, who ran me through what he and his research team are preparing their client portfolios for next year. The global economist continues to be in slowing phased that started mid – 2018 when the trade tensions between the US and China began.

However, the world’s main central banks implemented expansive monetary policies to avoid contagion, which helped industrial sector, the labor market and private consumption. This tactic has helped minimize the risks of a recession in the short term, said Santiago.

“In fact, we have started to see a drop in global risks. This is for three main reasons. First, 80% of companies are surpassing profit expectations for the third quarter of 2019. Second, the USA and China are making progress in the first stage of a trade deal. And third, the EU agreed to moved the Brexit deadline to 31 January 2020”, he said.

They are also recommending allocating a small amount (5%) to sovereign bonds of peripheral European countries that will benefit from the European Central Bank’s new quantitive easing measures. The remainder of their fixed income exposure (35%) is in investment grade corporate bonds from US and Latin America.

“Finally, in commodities, which account for around 10% of our portfolios, our team is seeing value in the agricultural segment based on the upcoming treat deal between the US and China. They also see values in precious metals as a hedge against potential geopolitical risks, said Santiago.

“In Latin America the political situation has become more unstable due to protest in Ecuador, Chile and Bolivia, while there is also ongoing uncertainty over Perú, Argentina and Uruguay”.

Fuente: Citywires Americas Magazine