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The ‘rally’ of the end of the year in the Bag gets up close and personal

In this effort to earn money in the Stock market everything is studied in detail. The most common methods are the fundamental analysis (is scrutinised the accounts of the results of the companies) and the chartista (using the graphics with the evolution of the quotes). However, investors also disposed of a long series of data and, sometimes, even methods that are closest to the esoteric in order to find out the most appropriate time to enter or exit the market. In this search, there is already a long tradition of statistics on the worst months and best to buy shares. And thus is born the myth of the bullish rally of the stock Exchanges of the end of the year, which usually lasts until the month of January. For example, in the Dow Jones index of the united States, over the past 50 years, December has been the second-best month with an average rise of 1,52%, only surpassed by the month of April.

the case of spain, the Ibex 35, since the year 2000 has climbed 12 of the 17 exercises in December, according to data from JP Morgan, with a revaluation average of 2.1%, a figure only surpassed by the month of October, with a return of 2.4%.

But behind the cold data to hide some of the reasons that support the thesis of the famous lug stock from the end of the year. One of them is the entry of fresh money from pension funds or investments that focus on the last month of the year for their contributions, something that happens mainly on pensions for the fiscal issue. In addition, many companies exploit to make up the price of their actions with the purpose of offering a better annual result. And they do so especially through the purchase of securities of its own (treasury shares), an operation that pushes upwards the prices.

it is Also common at this time of the year for a remodeling of the portfolios of large investors looking ahead to next year, trying to take advantage of the first days of January to secure positions in equities in the year as a whole. And, finally, in a period semi holiday as they tend to be the last weeks of the course, drops the volume of hiring in the Bag and it is easier to influence the rise in share prices without having to make a large investment to modify the price.

After a year disappointing, what will December to give a joy to the pocket of the investors? The experts consulted believe a key strength of the banks so that this end of 2018 is bullish on the Spanish market. The financial institutions have received a hard punishment along of 2018 and their weight in the Ibex, Forvetbet of more than 35%, determines, in great measure, to the index. Without your help it seems difficult any significant improvement.

“I don't know if you can or not have rally Christmas this year in the Spanish Stock market. A sector which can boost up the market is to the bank once it has clarified the issue regarding who pays the tax on documented legal acts of the mortgages. Has been the sector worst performance has been in the exercise, with the Euro Stoxx Banks giving currently more than 20%. It is feasible that, in the close of the financial year, the sector will see enter money and to drag behind itself the market, especially the Spanish,” said Juan Jose Fernandez Figares, chief of analysis of Link Securities.

Questions

The expert of Link Securities note of some questions that must be dispelled: issues such as the trade conflict between the US and China, or the clash over issues of budget between the populist government Italian and EU must generate positive news to calm down the mood of investors. “The new rise in rates that is expected to carry out the Federal Reserve in December could play against the aforementioned rally of Christmas, especially if the Fed gives to understand that it will continue raising its official interest rate at the same rate in 2019”, added Fernández Figares.

Nicolas Lopez, director of analysis of MG Values, explains that “we come from a strong fall of the european stock Exchanges and we are in a good recovery position for the end of the year. There are doubts as to the Brexit or Italian finances, but I do not see reasons for the weakness in the markets”. Lopez provides a bounce, although we will have to wait to see if it is sustained over time and believes that the best way to ride is with a diversified stock portfolio. Likes electrical values and of renewable energies such as Iberdrola, Acciona and Siemens Gamesa. While acknowledging that the banking sector lacks profitability, it is clear that it is very undervalued and I would bet by the Santander by considering him to be the most balanced.

The expert of MG Values also sees opportunities in the real estate market, especially in Merlin and Metrovacesa. And for the sector to cyclical points to the airline to IAG and at firms tied to the auto bet by CIE Automotive and Gestamp.

The director of analysis for Atl Capital, Ignacio Cantos, provides for a good end of year for Bags after an October's very bad, and a complicated exercise. “My positive vision is based on market valuations. Corporate profits are up 11% and the european markets will fall by around 7%. If we do not have a bad macroeconomic forecast, according to international bodies, this difference between a profit and a market decline points to a significant discount in valuations”. In the opinion of Edges of the Bags are “baratísimas”, with the values trading at 12 times its benefit (PER). The only thing that could chafar this forecast, he explains, is a poor expectation of the economy, which is estimated by now. “In addition, the bonds are still with yields very low and are not competing for the income variable”.

finally, Victoria Tower, responsible for development of content, services and products of Self Bank agrees that the key to see a year-end rally is in the banking sector. “Another stimulus might come from a better make of some of the economies in which the large Spanish firms operate, as is the case of Brazil. If in the previous quarters, the impact of the currency has been negative, now could be the opposite situation. In the event that to relax tensions between China and the US and walk away the fears of a meltdown of the emerging markets,” concludes Tower.

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