How to invest in the second half of 2022? Starting in July, the focus of the markets is likely to shift from rate hikes by central banks (whose programs are now known) to corporate profits, which will have to be the crucial element on the basis of which choose stocks and bonds corporate to keep in wallet. This is the opinion expressed by Alessandro Fugnoli, Kairos' strategist, in the latest episode of his monthly podcast “On the fourth floor”.
Recession at the gates for Europe and the USA
The analyst recognizes that we are now in a condition of "established stagflation”, as inflation travels above 8% and GDP growth is increasingly tapering. And the scenario is not expected to improve in the coming months, because the price run will slow down, but rate hikes they will make themselves felt on the real economy. It will come like this yet another recession of the last 15 years (the fifth in Europe, the sixth in Italy), of which, at the moment, it is not possible to predict either the duration or the seriousness. "The answer in fact depends on how determined the central banks will be to bring inflation back to two per cent, as they say they want to do," argues Fugnoli.
All of this will be true for Europe and the USA, but not for Asia and for the major oil-producing countries, which will in all probability continue to grow.
Sectors already in crisis and those that will save themselves
In the United States, “the two traditional most cyclical sectors, the house and the car, are already in contraction”, while “in Europe they are in trouble sectors that consume a lot of energy – writes Fugnoli – With interest rates that will continue to rise at least until the end of this year, the recession will spread like wildfire”.
Exceptions will be some categories of services “that enjoy a strong backlog of demand, such as tourism and air travel”, continues the analyst, not counting the growth that is easy to predict for “the public investment for rearmament, the semiconductors , energy transition".
Investments in sectors related to fossil fuels “They will instead resume next year when the new US Congress, almost certainly with a Republican majority, eliminates restrictions and disincentives for production in the United States”.
How to invest in the second half of 2022?
For Fugnoli, at the moment, the only certainty is that "the challenge over the next few months will be particularly demanding", because "the looming recession makes it more difficult to find refuge in the sectors that have held up well so far in these months of falling stocks such as mining and oil". The best way to invest in the second half of 2022, therefore, will be to focus on "stocks with very low multiples and from companies that have high pricing power because they have little competition”.
For those with liquidity, "the coming months will offer a good opportunity to build equity positions - concludes the analyst - while those who have already invested will have to take advantage of the increases to make some easing, with the aim of buying back lower and thus lowering the loading price".
