Stock market speculators are in their element. Financial markets have been very volatile for some time. Once a large capital escapes from the market (as, for example, on Friday due to concerns about Deutsche Bank), and then we see an influx of risk appetite.
In the opinion of Piotr Dmuchowski, Vice-President of the Management Board of TFI PZU, market moods change from day to day, and the scenarios that may occur are relatively extreme.
“We have a binary approach to the markets that has been going on since last year. Either we expected disaster, we feared a gas shortage in the winter, then the markets switched to optimistic outlook when China opened up, and now we hit the wall againbecause we have a crisis in the banking system, with a risk to financial stability,” comments Dmuchowski.
He notices now markets are at a crossroads. On the one hand, we see that inflation is clearly falling, but on the other hand, central banks believe that inflation is at a relatively high level. Depending on the chosen scenario, central banks may approach interest rates differently.
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What to do with the money?
According to the vice-president of PZU TFI, this and the next quarter will bring an overestimation of the impact of high interest rates and consumer weakness on some sectors on global stock exchanges.
– We are beginning to like the IT sector, but only large companies from this sector, with a strong balance sheet, with large cash collateral. We also follow the medical and biotechnology sector closely. These are the industries that during an economic slowdown, they are a good store of capital, which gives you a chance to earn – indicates.
See also: Consequences of war and inflation. Transactions in the market have been frozen
— The foundation is to maintain relatively high liquidity in the portfolio, which is why optimistic entry into small and medium-sized companies is not advisable for the time being. On the debt securities market, we definitely prefer short-term bonds, as they are still an attractive investment from the point of view of the weight of risk and return. When it comes to corporate bonds and credit spreads, those spreads should be widening. It seems that the risk premium has not fully adapted to market realities, notes Dmuchowski.
Watch out for interest rates
Radosław Cholewiński, member of the management board of Skarbiec TFI also points out that March showed that there are some fuses that seem to blow and show the negative impact of interest rate increases on the situation of banks.
— It is not that interest rates in an extremely leveraged borderless world economy can be raised. There are no models that could predict the effects of price increases on the economy. In my opinion, the situation is developing, it may be that in a few weeks the tone of the summary may be different. We are in a period when it is difficult to summarize the situation, but it is easier to say what we do not know yet – he admits.
Tomasz Tarczyński, president of the management board of Opoka TFI, sounds quite pessimistic. In his opinion, capitulation of investors in the markets is still ahead of us.
Bessa is yet to come
— We are in a long-term bear market, the first part of this bear market ended in the fall and concerned the IT sector. After de-reacting this recession, which was widely announced in the fall, will come later and may therefore be deeper. The second part of the bear market may be more about cyclical companies. We are looking at when this recovery in the fall will end and then it will be time for the second part of the bear market – suggests Tarczyński.
He also notices an interesting change. “It used to be considered contrarianism to buy when there was blood, now everyone does it. Investors are used to buying on the decline, there is a psychological effect after the covid crash. Then we had a rapid decline and an equally rapid recovery. (…) It will take some time for the so-called crack. speculative bubble over everything – indicates.
