FINANCE | 09.30.2020

“The US election is going to consume investors’ attention over the next month.”

Ismael García Puente

Investment manager and fund selector at MAPFRE Gestión Patrimonial

Daniel Badía

The first debate between the two candidates for the US presidency on September 29 was tense, to say the least. “Shameful” and “vulgar” were some of the qualifiers used to describe it by the media.

And the day after the debate, US futures and bond yields barely moved, which in the opinion of Ismael García Puente, investment manager and fund selector at MAPFRE Gestión Patrimonial (MGP), reflects current doubts and is a clear sign that “the US election is going to consume investors’ attention over the next month.” And, as he adds, in an interview with A Media Sesión on Radio Intereconomía, it could lead to the worst scenario for the North American stock market, with global repercussions: “This scenario is the possibility that we will have to wait until January to be clear what is going to happen.” It is not unreasonable to observe that investors are already hedging that risk through derivatives.

This source of uncertainty, together with the evolution of the pandemic and the race to secure a vaccine, are causing strong volatility in the stock markets, which has resulted in the main indices behaving differently. “It’s going to be a year of dispersion between indices and between sectors, and even between companies within sectors. We believe that the last part of the year will continue to be this way,” adds the MGP expert, who nevertheless acknowledges that this environment represents a good opportunity for active management.

On top of this, the new measures being taken to control the pandemic, or those that will be taken in the immediate future, will continue to condition macroeconomic data. “Although these are lighter measures than we saw back in March, they’re already having an effect on consumer confidence, which is borne out by a decline in card payments and online shopping,” explains García Puente.

For these reasons, our expert advises retail investors to exercise caution in this environment of volatility and strong market turmoil, which is also being felt in the currency market. “We recommend two basic tools in this context. The first would be greater diversification to counter the divergence in the indices. And the second would be to introduce the concept of periodic fund allocation, which avoids locking in to dangerous timing and creates long-term financial discipline,” he concludes.