Inflation and negative interest rates may be an opportunity for stock market investments
Rising consumer inflation will result in high dynamics of revenues and profits of companies, so an increase in dividend rates can be expected. Negative real interest rates will help shareholders. On the other hand, on the Polish stock exchange, the level of valuations in the medium term encourages optimism, say the managers of Skarbiec Towarzystwo Funduszy Inwestycyjnych (TFI).
"I do not know whether the threat of stagflation is real, but it is certain that in the coming quarters, which should continue to grow for economies (in real terms), the dynamic growth in the prices of consumer goods and services will result in high dynamics of revenues and profits of companies. on the other hand, negative real interest rates, deadly for bondholders, will help shareholders," wrote the director of the capital market fund management department Grzegorz Zatryb in the monthly analysis of the Society.
"So, even if the central banks occupied with the fight against inflation cannot support the economies, a slowdown in real growth does not mean a collapse in the dynamics of corporate results. Success in fighting inflation may coincide with an economic slump, it may even be its cause. Due to the decent state of the global economy and the known delay in the operation of monetary impulses, stock markets are still attractive," the director said.
Also on the WSE, the current valuations may turn out to be an incentive to invest, says Łukasz Siwek, who manages Skarbiec TFI.
"Once again, we pay attention to the level of valuations, which in the medium term make us optimistic. The WIG index (reflecting the behavior of the broad market) was recorded at the end of April on the price to earnings ratio (P / E) equal to 7.7 with a 10-year average of 12, 2. The WIG20, mWIG40 and sWIG80 indices are also traded well below the historical average," wrote Siwek in the analysis.
In April, we ended the earnings season for Q4 2021, in which over 70% of the WIG20 and mWIG indices exceeded expectations. In the case of the sWIG80, it was successful in 52% of cases, he emphasized.
"Currently, the publication of the results for Q1 2022 is underway, which at the moment is carrying a strengthening of the trend of positive surprises. Analysts expect high double-digit increases in aggregate results both in annual and quarterly terms. Positive tendencies should continue in the fuel, mining, and mining sectors. banking or chemical," he added.
In the coming months, in addition to monitoring the published economic indicators, much attention will be devoted to financial resources that Poland may receive from various aid programs. They can provide important support for the Polish economy, which is slowing down today, the manager also pointed out.
Skarbiec Holding is a group that deals with the management of investment funds (open-end investment funds, specialized open-end investment funds, closed-end investment funds) and contract management services for financial instruments portfolios. Skarbiec Holding S.A. is the sole shareholder of Skarbiec TFI S.A., which was established in 1997 as the fifth investment fund company in Poland and is one of the largest companies independent of any banking and financial group in Poland.
Source: Skarbiec Holding and ISBnews