US technology stocks need to be watched carefully, says president of Santander Asset

With the heightened level of uncertainty about the domestic outlook for 2022, many investors have turned to opportunities seen as more attractive in the global market today.

However, this does not mean that the international environment does not also have its risks that need to be taken into account.

Executive President of Santander Asset Management, Carlos André assesses that some sectors on the American stock exchanges that have already appreciated strongly over the past few months, such as technology, may be at relatively salty levels.

“We have a positive bias in relation to the US stock market for next year. The observation that I emphasize here is that this positive bias has to be weighed by the appreciation of some assets. In other words, for some assets in particular, the level of price has to be looked at carefully because, in some cases, we have the interpretation that it is expensive, basically”, said Carlos André, during lunch with the press this Wednesday (8).

He added that the group of technology papers, which has risen the most since the pandemic began, is among those demanding the most attention from investors.

“Technology was what pulled [a alta das bolsas nos EUA] and, without a doubt, technology in the American market has to be looked at carefully,” said Carlos André, who recalled the pressure that the sector has been suffering around the world over the last few weeks.

With the pricing of shares scheduled for this Wednesday on the New York Stock Exchange (NYSE), in the US, the digital bank Nubank had to reduce the claims of capital to be raised with the market due to this lower appetite of investors for new technology businesses .

Part of this most difficult moment traversed by stocks is related to the beginning of the cycle of high interest rates by the Federal Reserve (US central bank), which will increase the cost of capital of companies on a global scale.

The manager of the Spanish bank works with a base scenario in which the American monetary authority should promote the first increase in interest rates in the third quarter of 2022.

Santander Asset’s forecast is that the interest rate in the United States will end December next year at 0.6%, rising to 1.6% in 2023 and to 2.5% in 2024.

“The global market will continue delivering robust growth in activity, even though we perceive a slowdown in relation to the numbers we will find in 2021”, stated Carlos André.

After an estimated growth by Santander Asset for the global GDP (Gross Domestic Product) of 5.9% in 2021, largely due to the weak basis of comparison, the advance should decelerate to 3.9% and 3.1% in 2022 and 2023, respectively, according to the manager’s accounts.

Moving to Brazil, Carlos André predicts that, given the challenging scenario projected for the coming months, with low economic growth and uncertainties about the elections, and with much higher interest rates than in the recent past, the outflow of the Stock Exchange towards to fixed income should continue as the market’s guiding trend.

“One of the points of greatest uncertainty and of greatest concern is how the fiscal policy will be conducted, not only over the next year, but what kind of signals will be transmitted by the candidates”, said the president of Santander Asset, who before after assuming the position, he headed the manager of BB (Banco do Brasil).

He even held for a brief period —between the end of 2020 and April 2021— the post of vice president of financial management at the state-owned bank.

“Our past experience shows that, more than the party or the candidate’s name, there is much more to what the market will hear about the candidates’ economic plans and programs,” said the executive chairman of Santander Asset.

The asset manager forecasts GDP growth in Brazil of 4.6% this year, and 0.5% in 2022.

For inflation, the expectation is that the IPCA (Broad National Consumer Price Index) will end 2021 at 10.4%, and, next year, at 5.4%, above the 5% ceiling of the BC target (Central bank).

The Selic needed to bring prices back to normal should be 11.25%, according to forecasts by Santander Asset.

In this turbulent context, Carlos André said that shares of companies with characteristics of greater resilience and with the potential to act as consolidators in their respective niches of activity tend to stand out against their peers.

The financial and public utilities sectors, made up of sanitation and energy companies, were mentioned among the segments that tend to outperform their peers.

With higher interest rates, real estate securities, on the other hand, may be among the most penalized by investors, he said. “The real estate sector as a whole is pretty hot right now, but I think it’s a point of attention.”