The main topic of the Analytical Forum 2021 was the impact of inflation on investment. Watch the record online for free
Press release: On Wednesday, May 26, XTB organized a meeting of experts from the world of finance and investment. The main topic of this year's Analytical Forum was the situation on the markets in the post-time period and how to approach investments in this situation. The lively debate of financial analysts and economists therefore aimed to prepare students for the coming months and provide them with the most accurate and comprehensive information on which to base their investment strategies. There was talk of macroeconomic and stock issues, commodities, forex, as well as the Czech crown and cryptocurrencies.
The discussion during the online conference was moderated by Petr Novotný, editor-in-chief of the financial portal Investicniweb.cz. Right at the beginning, the speech turned towards inflation, which now dominates most reports on macroeconomics. One of the first speakers, Roger Payment Institution's chief economist, Dominik Stroukal, admitted that he had surprised him, contrary to last year's forecasts. "Inflation is higher than I would expect and most models showed. However, the reaction of the Fed and the ECP is not surprising, because we are faced with the textbook question of whether or not to puncture the bubble. We all know what would happen if we started to raise rates very quickly, so the current situation is considered a temporary trend, "he said. His words were also confirmed by David Marek, the chief economist at Deloitte, when he said that the rise in inflation is temporary and only depends on how long this transition will last. According to him, the reason is the acceleration of the Chinese economy, and especially its demand, which sucks up commodities and transport capacity around the world. He also added that stuck supply chains on the supply side could also be the cause of increased inflation, especially the lack of chips and rapidly rising prices of container shipping.
The topic of inflation was also reflected in the discussion on forex and currency pairs. Pavel Peterka, Ph.D. in the field of applied economics, he believes that higher inflation affects riskier currencies such as the Czech koruna, the forint or the zloty. According to him, rising inflation creates room for the CNB to raise interest rates, and this strengthens interest in riskier currencies, which benefit and strengthen from it. At the same time, however, Peterka warns that rapid change may come with the decisions of larger central banks, or a new wave of covide.
From the assessment of current market developments, the discussion has shifted to thinking about the most appropriate approach. Jaroslav Brychta, chief analyst at XTB, spoke about the investment strategy on the stock market in the coming months. "Unfortunately, last year's cheap wave of shares is behind us. Even the share price of American small caps, small companies producing various machines or doing business in agriculture, is not rising. It makes much more sense for me to go back to the big technology companies, which last year seemed extremely expensive, but when we compare it with smaller companies, Google or Facebook do not look so expensive in the end. In general, there are not many opportunities in America at the moment. Personally, I'm waiting and waiting for what the coming months will bring, and I'm still looking at markets outside America, for example in Europe. Smaller companies may not be so growth here, but you can still find interesting sectors, such as construction or agriculture – they have a net cash position and earn money, "outlined Brychta.
In the second half of the Analytical Forum 2021, individual speakers also commented on the large growths in the commodity market. This year, in some cases, commodities are starting to outperform fundamentals. The most extreme example is construction timber in the United States, where factors on both the demand and supply sides have met. This market can therefore be cited as an example of the correction phase, when prices have risen to astronomical heights and are now falling. Even so, commodities can be considered the best inflation hedge of all investments. Štěpán Pírko, a financial commentator dealing with stock and commodity markets, personally likes gold because, according to him, it works very well even in the case of deflation. It therefore makes sense to have gold represented in the portfolio to a much greater extent than cryptocurrencies. In any case, according to him, chests of drawers cannot be thrown into one bag and it is necessary to be very selective.
At a time of commodity bubbles, which, as most participants agreed, is prevailing in the commodity market, according to Ronald Izip, they are cheap, and therefore good for long-term US bonds. According to the editor-in-chief of the Slovak economic weekly Trend, they are the primary collateral just like gold, and therefore have the ability to find their own balance. However, if these two commodities are held, he warns against panic in the financial markets, when large investors start selling gold to get cash. In this case, the price of gold begins to fall. However, given that he does not expect such a situation in the future, he recommends that US bonds and gold be included in investors in their more conservative portfolios instead of technology stocks.
The record of the analytical forum is available to all users free of charge online after filling out a simple form on this page. Thanks to it, they will gain a better overview of what is happening in the financial markets and will learn useful tips about investing in the current post-time period.
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