Editor’s note: This article was first published in November 2010 as an outlook for 2011; the analysts’ positions, sector picks, Ibex forecast and fears of a Portuguese bailout belong to that moment. Portugal requested a bailout in April 2011, and the Ibex 35 ended 2011 well below 11,500 points.
Once again we come back to how hard it is to choose a stock or an investment vehicle in these uncertain times, so we have gathered the advice of three expert analysts, who give their personal views on where to invest with an eye on 2011.
Alberto Espelosín (head of research at Ibercaja Gestión)
Next year is going to be complicated because of the state of the economy. Economic growth and profit growth are slowing, and we expect fewer corporate deals. It may be a good time to buy Spanish shares now, but they will only do well if the yield spread between Spanish and German ten-year government bonds falls below 2%.
By sector, we are conservative: we like telecoms and pharmaceuticals.
José Pons (head of product at Citi)
Before making any decision, the adviser must analyse the investor’s risk profile, which determines how much weight each asset gets in the portfolio. Right now a conservative investor should have 20% of their wealth in money market funds, 70% in government and corporate bonds and the rest in equities, mainly European.
A balanced investor should put 50% in fixed income and the rest in equities. An aggressive one should have 20% in fixed income, both emerging and developed markets, and the rest in equities.
Rosa Dulce (economist at Deutsche Bank’s Investment Centre)
The international reach of the big Ibex companies and, above all, their exposure to emerging markets make us optimistic about how our benchmark index will perform, and we expect 2011 to be a good year for the Ibex, with the index going above 11,500 points.
Among developed countries, we still prefer the United States and Germany. We are also sticking with our bet on emerging markets, mainly in Asia.
Our view
Far from disputing any of these three points of view, we can see that for some time now most of them have agreed on the importance of having emerging countries in our portfolio. These markets are currently performing quite well and are even earning more confidence where risk is concerned.
Honestly, I don’t think this is the time to pick a stock on the Spanish market, as we will have to wait a few weeks to see how the market reacts. As far as Spanish shares are concerned, it may be time to give ourselves a few weeks off until there is fresh news, because we are still worried about whether Portugal will need a bailout, which could affect the Spanish market.
If Ibex stocks fall again, we could find an incredible opportunity to get into the stock market.
Further reading: Stock market investment analysis for 2011
Featured image: Spitzl, CC BY-SA 3.0, via Wikimedia Commons.
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