Reflation Puts Real Profitability Of Investors In Check

There is a word that sounds right now in all groups: reflation, or what is the same, the return of inflation .

For weeks, experts have warned of rising prices as a result of the economic recovery, but also of the monetary stimuli put into circulation by central banks. To give us an idea, only the European Central Bank (ECB), the head of monetary policy in the euro area, will inject almost 2 trillion euros.

What are these inflation prospects causing? In the first place, to hedge against this rise in prices, the rise of all assets. Not only stocks, but also the yield curve. Something that the ten-year American Tresuary is already noticing, which climbed to 1.37%.

Contrary opinions
But despite this, not everyone thinks that it will occur in the short term. Ariel Bezalel, head of Fixed Income strategy at Jupiter AM, believes that it is not close since ” some measures predict that future inflation will be 2.4%, matching the levels forecast in 2017-18 “.

Bezalel points out that “those in favor of reflation could say that we are in an environment of very low inflation, with enormous fiscal and monetary support and high levels of consumer savings accumulated during confinement”, but warns that ” some elements of the reflation market seem too optimistic ”.

A different opinion is shared by Chris Iggo, manager of AXA IM, who explains that the evolution of corporate earnings supports the equity market, despite the rise in the yield of the bond market that “has been driven by the increase in expectations of inflation”.

If inflation really consolidates, what will it mean for the investor? Bond investors might freak out for a start .

This would have an immediate effect on the Fed, which needs to assure markets that it is on top of everything. The message has to be that inflation would have to be higher for longer to alter monetary policy.

Dangers for the investor
The concern is that long-term interest rates may reach a level where they turn negative for credit and stocks.

“This scenario can be very negative for investors in fixed income and, as for the variable, everything will depend on whether business profits exceed the possible fall in multipliers,” explains Pedro del Pozo, from Mutualidad de la Abogacía.

Until now, low inflation or negative inflation had been an ally for the most conservative investor, those who seek to preserve their capital, with minimal risk. This negative inflation compensates these investors for the low returns they obtain since the real return is obtained after adding or subtracting inflation to the yield. Thus, with negative inflation and yields, for example, of 0.2%, real profitability rises to 1%.

In the event that inflation shot up to 2% and returns were 0.5%, the loss of returns would be 1.5%.

From Lyxor they list that both the earnings season and economic data continue to exceed expectations on both sides of the Atlantic, while the latest clinical results on Covid-19 suggest that vaccination campaigns could accelerate substantially in the second quarter.

For this, it is necessary to bet on products that serve to protect the portfolios for this price increase.

Reflationary bets involve cyclical assets such as equities, emerging market assets and commodities, which performed well and could continue to do so.

In the universe of alternative strategies, Global Macro opted for reflationary operations in the last quarter, with an increase in positions in emerging market currencies, commodities and inflation-linked bonds to different degrees.

Pharmamar And Jazz Have Common Reference Shareholders

Pharmamar and Jazz Pharmaceuticals share, in addition to Zepzelca , the same reference shareholders with Blackrock and Vanguard as the maximum exponents of this fact.

Blackrock is Jazz’s largest shareholder with a weight of 11.35%, which makes it hold a position with a current market value of more than 1,000 million dollars. The US manager settled in this position in the third quarter of last year by increasing its stake with more than 1,930,000 shares.

Vanguard, another global investment giant, is the next leading investor in the Irish company with an 8.66% stake in working capital valued at $ 768 million, according to data compiled by Bloomberg . In addition, from 2014 to 2019 they did not stop increasing their exposure.

State Street, Norges Bank and Dimensional Fund
The State Street investment fund is the sixth shareholder of the Irish-born company, with a 4% position corresponding to $ 355 million, and also has a significant presence in Pharmamar.

The same is true of Dimensional Fund and Norges Bank , although both are far from the noble zone on the Wall Street market.

Jazz’s thirteenth shareholder is for Dimensional Fund, which holds 1.57% of the company’s total positions, which are currently worth just over $ 139 million.

For its part, the Norwegian central bank is the nineteenth investor of the Spanish partner with a position that has remained intact since 2019 and that corresponds to 1.19% of working capital, just over 105 million dollars at market price.

Another giant, Fidelity , closes the “ top 5 ” of shareholders , in fourth place with 5.20% of the working capital that is worth 450 million dollars in the stock market and in fifth place is the LSV AM fund with 357 million, 4.03% of actions.

The capitalization difference
There are large differences in value between the positions these investors have in the Irish company and those they also have in the biopharmaceutical of Galician origin.

This situation is explained, beyond the volume of shareholdings, in the market value of each of the companies.

In euros, Jazz Pharmaceuticals has a market capitalization of more than 7,300 million, while Pharmamar moves over 2,000 million.

Stock performance
Regarding their stock market performance, Jazz stocks fell 4% in the course and Pharmamar’s are the leaders of the IBEX 35 with a rise of more than 50% so far this year.

Regarding the mission of the market consensus, analysts who follow the evolution of both companies see more path to those of the ‘biotech’ of Ireland.

Thus, Jazz does not have a single recommendation to “sell”, 94.1% of the experts on the Bloomberg panel choose to “buy” shares and the remaining 5.9% prefer to “hold” the securities. Quoting above 157 dollars and a target price for the 12 months set by analysts at 197.47 euros, there is a potential for revaluation of more than 25%.

The fact of the cruising speed taken by Pharmamar makes experts cautious. 50% of them consider that it is necessary to “keep” the securities, 33.3% recommend “buying” shares and 16.7% choose to “sell” the positions. All in all, they set a target price of 100.6 euros and when trading above 100 the potential is negative by 2.6%.

Pharmamar’s reference shareholders
The first three shareholders of Pharmamar are clear, they are immovable and no one threatens their leadership. The maximum investor is its president, José María Fernández Sousa , with 6.50% of the securities valued at more than 129 million euros.

He is followed by one of the group’s advisers, Montserrat Andrade Detrell , in turn wife of the president, with 5.1% of the working capital.

The Rosp Corunna podium closes , the investment vehicle of Sandra Ortega inherited upon the death of her mother, Rosalia Mera , co-founder of Inditex along with her ex-husband Amancio Ortega . Sandra keeps 5% of Pharmamar left by her mother and with a current price of 100 million euros.

Aplidin company top 10
Just behind the management team of the company, as Sandra Ortega has just joined the board of directors, and a company related to the group, the aforementioned Vanguard, Blackrock, Norges Bank and Dimensional Fund appear.

Vanguard is the fifth investor in the Aplidin company against the coronavirus with positions worth 41.12 million euros, representing 2.06% of the shareholding. It is followed by Blackrock, with 1.68% valued at 33.45 million euros.

Right after, seventh shareholder, there are Norwegian investors with a weight of 1.68% with a market value of 23.69 million euros.

Finally, in ninth position, is Dimensiona Fund with 1.29% of working capital, which represents a weight of 26.46 million euros. To find State Street, you have to go down to the seventeenth position with 0.19% of the shares that are priced at 3.76 million euros.

Yellen Supports New IMF Entitlement Allocation To Help Poor Countries

Yellen backs new IMF entitlement allocation to help poor countries. US Treasury Secretary Janet Yellen supported a new allocation of Special Drawing Rights from the International Monetary Fund (SDR), but stressed that broad parameters are needed to drive transparency on how reserves are used and negotiated.

In a letter to G20 finance officials, Yellen said Thursday that a new SDR allocation could improve liquidity in poor countries and help their health and economic recovery efforts, reversing previous government opposition. from the United States.

The head of the US Treasury did not specify the size of the possible allocation of SDRs, which can be converted into hard currency by members of the IMF. G20 finance officials will discuss the matter when they meet via video conference on Friday.

Italy, which chairs the G20 this year, and other members of the rich and emerging economies group have endorsed a $ 500 billion allocation, but the Biden administration had kept their opinion in reserve until now.

Yellen said an SDR allocation and measures to boost low- and zero-interest loans by the International Monetary Fund and the World Bank would boost efforts to contain the pandemic and mitigate its devastating impact, especially in poor countries.

“Without greater international action to support low-income countries, we risk a dangerous and permanent divergence in the world economy,” Yellen said.

“An allocation of new Special Drawing Rights (SDRs) at the IMF could increase liquidity in low-income countries to facilitate their much-needed health and economic recovery efforts,” he said.

“For this tool to be effective, the G20 must work with a broad coalition of countries on a set of shared parameters for greater transparency and accountability in how SDRs are shared and used.”

IMF spokesman Gerry Rice hailed Yellen’s comments as “a very useful letter on a very important issue.”

Production of the new Seat Leon in Martorell

It will probably not be a space within the factory for security and confidentiality issues related to the production of vehicles, but surely some of the buildings attached to the factory will be enabled .

At first, there was also speculation about using part of the Free Zone lands that still belong to the company and where they manufacture sheet metal elements.

In addition, to reach a greater number of people, Seat could also enable some of the buses and transport trailers of its competition teams (Cupra) to function as mobile vaccination units .

The Spanish brand, chaired by Wayne Griffiths , has also offered Gerneralitat its medical and health staff to be the one to administer the vaccine doses. Dr. Patricia Such’s team provides its services in one of the most advanced medical centers in the automotive sector , CARS, which is located inside the factory and serves its 15,000 employees .

Seat has maintained a strong collaboration with health authorities since the pandemic began coronavirus, and after a few weeks even was producing emergency respirators , in the assembly line of the Seat Leon .

Medical personnel to vaccinate in Baix Llobregat

The car company and the Government announce tomorrow an agreement to enable a space near Martorell to carry out the vaccination of family members of employees, suppliers and residents of the Baix Llobregat area.

Seat, which during the beginning of the pandemic manufactured respirators on its assembly line, has also offered Salut the participation of its medical personnel to administer vaccines and use some of its buses to carry out itinerant vaccinations
Seat offers its facilities and medical personnel to vaccinate in Baix Llobregat

The Spanish car company Seat , based in Martorell , has reached an agreement with the Generalitat de Catalunya to offer its facilities to administer the coronavirus vaccine , within the campaign that the Department of Health is carrying out in the area from Baix Llobregat .

Seat and the Government have called a press conference tomorrow to stage this agreement and specify its details in which the vice-president with the functions of president, Pere Aragonés, the Minister of Health, Alba Vergés , as well as the president of Seat and Cupra, will participate. Wayne Griffiths , among others.

According to the information that EL PERIÓDICO has learned, Seat will have one of the areas annexed to the Martorell plant to be used as a vaccination center . In this way, after being contacted by Salut, people from the nearby towns of the Baix Llobregat region will be able to attend at the moment in which sufficient doses of the vaccine against covid-19 are available.