Ramón Forcada, Bankinter’s director of Analysis and Markets, outlines the keys for navigating the markets in the closing stretch of 2024 and the early weeks of 2025 during an interview with assets conducted at the bank’s Madrid headquarters. He notes that any topic tied to technological innovation is of genuine interest. He points to the company behind the Da Vinci surgical robot, which enables highly precise operations for patients, as a clear example. He adds that it will also be a period to favor utilities, bonds, and, naturally, real estate. [Bankinter interview, Madrid, 2024]
In his view, the public administrations’ reluctance to release land is limiting the construction of enough housing to meet demand. “Municipalities are not offering spaces to developers. They cannot say so publicly because it would pit them against the public sector. If the aim is to have homes for everyone, the best approach is for towns to release land, but there is little incentive to do so. This leads us to expect housing will stay expensive, making real estate a sensible investment in the current stock market environment,” he states with conviction. He also mentions the surge of tourist apartments in cities. “Despite the restrictions, demand for this type of accommodation has matched hotel room demand. The overall demand is very strong.” [Bankinter interview, Madrid, 2024]
Beyond these sectors, Forcada highlights U.S. technology equities. “Nvidia is unique; we place substantial value on its business because we believe that many rivals would face high barriers to entry if they attempted to replicate it. It is nearly impossible for another company to launch something comparable to Nvidia. They are diverging from their challengers. Nvidia and the Nasdaq present a performance that makes us think investing in this path is warranted.” [Bankinter interview, Madrid, 2024]
One factor that has moved markets after the summer is the stimulus plan announced by the Chinese government. It has triggered pronounced volatility, with sharp declines and recoveries within short periods. Asked about the motives behind these moves, Forcada expresses skepticism about the measures the Beijing administration has rolled out. “This Asian country carries a structural issue rooted in demographics. In 2022 they lost population, and that will weigh on their growth for decades to come,” he details. [Bankinter interview, Madrid, 2024]
Bubbles in China
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Chinese authorities have lowered the reserve requirement ratio for banks to boost liquidity and help fund projects. “Now the balance sheet of the financial institutions will carry less collateral, yet they will be able to lend more money. But one must consider whether that is really the core issue. In my view, there is a credit bubble fueling a real estate bubble, which in turn has supported a stock market bubble. It had started to burst this year, but the government stepped in to prevent a market collapse,” he asserts. [Bankinter interview, Madrid, 2024]
Another challenge for China is its real estate bubble: “They have built homes that nobody wants to buy. Now they will need to increase low-cost production to generate jobs for their people. Yet the problems facing this giant are structural.” In his view, “if bold reforms to liberalize the economy or introduce political pluralism are not pursued, no matter what stimulus plans are launched. Without a truly free price mechanism, the fundamental problems won’t be solved, and long-term growth will be hard to sustain. Ignorance, especially in economics, is dangerous because it leaves people with little financial cushion.” [Bankinter interview, Madrid, 2024]
Regarding the other major Asian economy, Japan, Bankinter analysts believe the country will continue to raise rates to spur inflation and growth, though at a pace slower than previously expected. [Bankinter interview, Madrid, 2024]
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