Asia has been the best performing region globally this year because of China being the best performing market and tech being the best performing sector. In Hong Kong in particular the impact of Tencent has been extra-ordinary as the largest stock in the market with a current weighting of almost 12%.
US companies’ profits have exceeded forecasts by 4.6%, the European ones by 2% and Japanese firms by 6.7%. This has fuelled a strong rally in the stock markets in just a few weeks. But is there room for the markets to rise further?
There is a huge increase in income and wealth for the richest 1%, and a continued decline in income and assets for the poorest 10%. Politically speaking, this is a bombshell.
Jaume Puig (Managing Director GVC Gaesco Gestión) | Recurring terrorist attacks end up making the markets immune to them, so that is one good reason to buy stocks now in August after the tragic events in Barcelona.
Cristina Martín (GVC Gaesco) |With most investors on holiday in the month of August, stock market volumes are traditionally low. This factor, combined with the effect of specific economic and political events can fuel a rise in volatility and huge fluctuations in prices.
Various world-renowned experts are increasingly doubtful that the stock markets’ level is sustainable. But there is still huge euphoria. While money remains cheap, in relation to the expectation of gains, speculation will continue.
World stock markets are at record highs, particularly in the US, boosted by the promises of a heavy investment drive made by President Trump. But the fundamentals don’t support the markets’s strong performance, which is causing some concern.
Making judgements on “whether a market is expensive or cheap,” using aggregates of prices and earnings, is a very risky simplification. To begin with, there are companies which don’t make money or even lose it, and quite a lot of it. Responsible, professional investors don’t buy stock markets indices, they buy shares. They don’t invest “top-down” but rather “bottom-up”.
Investors realise that the political risk in France has decreased substantially and are less concerned about what might happen on the political front in Italy and Germany. Now it’s time to look at companies’ fundamentals once again and continue to focus on the ECB’s decisions over the coming months.
The Spanish equities market saw a turnover of €652.907 billion in 2016, a decline of 32.1% from a year earlier. The fall is in line with the general decrease in volumes registered in stock markets across the world. In December, trading volumes fell 27.5% to €48.987 billion from a year earlier.