How to build the portfolio in the middle of the coronavirus crisis

How to build the portfolio in the middle of the coronavirus crisis

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Look at the calmer values, add controlled risk when there are strong falls and go to the punished ones at the end of the month, the recipe of GVC Gaesco.

The falls suffered by the exchanges, between 27% and 31% in the accumulated index of the year, can generate profit opportunities if the portfolio is managed properly, according to a report by GVC Gaesco to which EXPANSION has had access.

It is time to prepare the portfolio. The director of analysis of the firm, Victor Peiro, argues that it must be built in three phases, taking into account the circumstances:

  1. In the first, which would be the current one, it is advisable to enter values ​​that pose low risk in the current crisis situation. It proposes five companies: the Spanish Endesa, Enagas, Telefonica, the Italian Enel and the Portuguese EDP. He believes that they will not stop entering and that the impact of the coronavirus on their businesses will be less. In the case of Telefonica, for example, it is seeing something benefited by the increase in the hiring of packages and less customer flight.
  2. In a second phase, GVC Gaesco Valores recommends incorporating companies with a little more risk into the portfolio. Select five values ​​that are not directly affected by the coronavirus crisis, but that may be somewhat affected by the expected macroeconomic slowdown. Among its proposals are Sacyr, MasMovil, Indra, Solaria and the French Air Liquide. They are companies in which it is necessary to invest little by little in sessions of strong falls and with a long-term vision.
  3. We would have to wait for a third phase to enter high risk securities such as IAG, Melia, Inditex, Acerinox and Gestamp in the portfolio. GVC Gaesco Valores starts from a scenario of recovery of the activity in the form of “U” from the second part of the year, something that the market will anticipate earlier. For this reason, it would be necessary to start giving more penalized values ​​as of the second fortnight of April. It would be time to incorporate companies that are very affected by the impact of the coronavirus crisis on their businesses. They are companies that have fallen a lot in the Stock Market, between 28% and 68%, and when light is seen at the end of the tunnel they will rebound strongly. Peiro expects this to happen with the shares of Acerinox, which yields 38.4%; Inditex, 28.4%, Melia, which has left 51.3% and Gestamp, which has said goodbye to 48% of its capitalization. IAG, which falls 68.38%, is the riskiest value because Peiro expects air restrictions to remain in place for a while.

Watch out for banking

GVC has put banks aside because it thinks they are “the last link in the recovery chain”, since in addition to directly suffering the decline in GDP they expect that they may be affected by an increase in delinquencies and absorb the impacts of other industries .

Peiro explains that even taking into account the disappearance of the results of a year within a lifetime of the company, this should not justify the loss of value of 60% -70% that some companies have experienced. “The punishment received seems excessive considering the financial aid plans that exist and the scenario of contagions going down in two months,” he says. “We have started to measure the impacts in valuation and we move between 10% and 30% of the valuation,” he adds. To this we must add that companies are taking measures to protect themselves from the drop in income.

On the other hand, the report also has the opinion of Jaume Puig, CEO of GVC Gaesco Gestion, who states that he is taking advantage of the falls to buy because he expects the effect of the Covid-19 to be intense, but short. In the Stock Market they are investing so much in companies that were already cheap before, and that are now to a greater extent, and also in those that were expensive and are now at more attractive prices. From his point of view, “the stock market recovery could take a V shape.” Puig points out that the Covid-19 has had a three bubble containment effect: real estate, venture capital and high yield.



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