Home Business For Equita, new variants fuel volatility but “manageable risk”. More UniCredit in portfolio

For Equita, new variants fuel volatility but “manageable risk”. More UniCredit in portfolio

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The last month of the year has begun on the markets, which sees the exit strategy of central banks and Covid variants in the foreground. Equita talks about it


With the start of December, on the markets the countdown to the end of 2021 has officially started. A final of the year that sees in particular two themes in evidence: i fears related to the new Covid variant but also the exit strategy of central banks. Just yesterday in his congressional hearing, Fed chairman Jerome Powell was less accommodating than expected, pointing out that the inflation rush can no longer be considered ‘transitory’. The reaction on the markets was immediate with a flattening of the US yield curve, with the 2-year yield rising by 7 basis points to 0.56% while the longer-term part of the curve (30Y) down by 6 basis points at the 1.8%. Oil fell 5% to $ 70 a barrel, bringing the overall decline over the past 5 days to 13%. “The market probably fears an increase in interest rates in the short term and that the reduction of liquidity by central banks could lead to an economic slowdown. The reaction seems to have partially subsided this morning, with an attempt to rebound commodities “, reads the ‘Monthly report‘released today by Equita.

Our baseline scenario – which supports our positive view on equity markets – remains confirmed, and is based on economic growth that we expect will remain solid also in 2022 (US real GDP + 4%, EU + 4.2%) and strongly negative real interest rates, with a fiscal policy that will remain expansionary “, he claims Luigi De Bellis, co-head of the Equita Sim research department.

High volatility with fears of new variants, but manageable risk

According to Equita, the increase in Covid-19 cases and fears related to the new variants will keep volatility on the markets high in the coming weeks. There remain “a risk to be monitored but we think it is manageable: we think that the cases will be controlled by an acceleration in the administration of the third dose of the vaccine; the development of new versions of the vaccine (Moderna is already working on it), and the faster approval of anti-Covid pills (Pfizer) which have shown promising efficacy in preventing severe symptoms and hospitalizations. “We are more concerned about a less controlled exit strategy by central banks, which could pose risks to the economic scenario and consequently to our basic vision ”, admits De Bellis.

What happens to the main portfolio, increased the weight of UniCredit

In light of these indications, Equita has decided to remain overweight relative to the benchmark (96% compared to the neutral weight of 95%), substantially unchanged compared to the previous month (96.6%). Equita then increased the weight of UniCredit in the blue chip portfolio, fully balanced by a reduction in the weight of Mediobanca and Fineco. “The weight increase is aimed at capturing the opportunity that could emerge following the new business plan that will be presented on December 9 and which, in our opinion, could constitute a positive catalyst for the stock, also in light of the recent weak performance ”, explain the sim analysts.

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