Reported by Consejeros Editorial Team
The latest Financial Stability Report, published at the end of July by the National Securities Market Commission, warns that market risk – particularly that linked to technology shares – is the main financial vulnerability in international markets, and that Spanish investment funds’ exposure to it is moderate.
Meanwhile, in fixed income, the impact of the war in the Middle East on inflation has led to an upward shift in expectations for interest rates. Spanish investment funds have a high exposure to fixed income (64 per cent of assets under management), but limited sensitivity to rate rises, due to the short duration of the portfolios (modified duration of 1.94).
In equities, although share prices generally continue to be supported by corporate earnings growth, certain segments related to technology and artificial intelligence (AI) are trading at high valuations relative to their historical averages and account for a growing proportion of equity trading.
Furthermore, recent or planned initial public offerings (IPOs) by US technology companies could exacerbate issues of overvaluation and concentration. In this context, the total exposure of Spanish investment funds to technology companies is limited (11 per cent), although it is substantial in equity funds (31 per cent).
