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Market Situation May 2020



Our first words are for those who, in one way or another, have been hit by this pandemic. From Loreto Mutua we want to transfer our support and solidarity to those who are in a difficult situation. Likewise, we join those millions of applauses to thank all the effort that many groups -the airline sector among others- have made in these troubled times and that have facilitated the work of many others.

As you know, these last months have been an unprecedented period in world history and, therefore, in financial markets globally. The spread of the coronavirus in late February, beyond the Chinese border, has meant a challenge for all countries without exception. World governments have implemented never-before-seen actions to prevent the deaths of millions of people, which will lead to a recession in the coming months, with few historical precedents.

World stock markets fell nearly 40% from the highs in late February, one of the biggest declines in history, and the fastest. In mid-March, extreme levels of volatility caused various market players to reduce their risk level, causing a domino effect that ended, in some of the sessions, with double-digit falls. We are not going to deny that it was a complicated situation from a management point of view, but, as is usually recommended in these situations, selling in moments of panic doesn´t usually work well. Following our own recommendation, we continue to increase the weight in variable income in the most turbulent days, mainly in those sectors that benefited from confinement (technology, communication and pharma).

Governments and central banks have gone the whole hog, initiating monetary and fiscal stimulus policies that, in some cases, doubled in size to those implemented in the wake of the 2008 crisis, which we considered to be the basis for recovery of the markets, as it has happened. The Eurostoxx 50 is up 23% from the March lows and the S&P 500 21%.

And now that? We could say that it is the million dollar question and more than ever, it is difficult to answer.

We could say that, if there is not a re-emergence of the pandemic and the countries gradually begin to step out, we could have seen the market lows. The tremendously expansive fiscal measures will help the recovery of activity in the second half of the year as it is currently happening in China.

Volatility will continue, and we cannot rule out of new, rapid and not-so-pronounced falls, which we would take advantage of to continue adding companies with a solid balance sheet, in cyclical sectors with visibility in this environment. Stock markets continue at attractive valuation levels, as long as, as we have discussed with many of you, we seek a medium and long-term time horizon.

Our mutual fund activated its contingency plan prior to the declaration of the state of emergency, the activity having been carried out normally except for the personal attention, which was replaced by reinforcing the telephone and telematic channels, facilitating the functions through our website and your “private area”.

With our help, everything will be easier, contact us directly by phone at 917589650 or, if you prefer, by email at

See you soon !!