In his presentation, Gábor Pozsgai, sales consultant of Diófa Alapkezelő Zrt., Emphasized the relationship between inflation and ESG, as well as real estate investments:
- Recovery from coronavirus was rapid in the region. THE Hungarian economy had already reached pre-viral levels in Q2. Hungary has the highest growth in the region this year, thanks to loose fiscal policy.
- Due to the rapid recovery, the labor market is tight again, the unemployment rate is low and wage dynamics may remain strong. This and the successive “temporary” inflation shocks (supply chains, gas prices) inflation has been persistently pushed above inflation targets in the region.
- In such an environment, it is feared that inflation expectations could start to rise permanently, which is why regional central banks have been among the first in the world to embark on a tightening cycle. The MNB raised the key interest rate from 0.9% to 2.1%, which could rise by 30 basis points per month in the coming months, and the central bank expects a higher real interest rate than before the virus. The yield curve may widen further and the forint exchange rate may remain volatile.
- He sees, however, that in the second half of 2022 equilibrium indicators may come to the fore in Hungary and the supportive nature of fiscal policy may disappear, thus indirectly helping to keep inflation under control.
- The virus is still at risk, and further restrictive measures may be introduced later this year and early next year. This is bad for the short picture, but it does not change the general picture and will not deter the MNB from tightening it either, he added.
- The In the United States growth could be 5.5% this year, followed by almost 4% next year, thanks to high vaccination and fiscal easing. Decision-makers recently approved the $ 1,000 billion infrastructure package, but the fate of further programs is questionable because of the division and declining popularity of Democrats. The budget deficit could reach 13% of GDP this year, which could even exceed 6% next year.
- The in the euro area due to growth of 5.1% this year and 4.2% next year, the fiscal position may be slightly more favorable due to lower fiscal easing (7.5% deficit). Although inflation rose to 4.1% in October, core inflation is only 2.1% (albeit rising), so the ECB is not in a hurry to tighten for the time being. Negative interest rates may stay with us for a long time to come.
- Inflationary pressures around the world are growing stronger and more persistent, he said, and these expectations are not easy to break, although we will probably see the top of that by the end of the year.
- In Hungary, premium government securities are significantly more attractivelike super government securities. He also highlighted real estate funds as a good investment opportunity, which, in addition to low spreads, can outperform government bond yields.
- A raw material investments they can be good if there is a persistently rising inflation environment, so it is worth treating this with more caution. THE shares He pointed out that after long periods of economic activity, indices are at record levels, it is difficult to predict when investors will begin to rebalance from equities to bonds. It turned out to gold also, according to the expert, gold is not necessarily the best investment now in times of inflation.
- He also spoke in more detail about mutual funds than investments that provide inflation protection. Among them also highlighted the leveraged real estate funds, but in this case the quality of the real estate portfolio is very important. One With an leveraged premium real estate fund, you can earn an annual return of 8-10% – He told.
- His presentation covered The growing popularity of ESG investments also, he highlighted that ESG-rated investments reached $ 40 trillion globally by 2020, an increase of nearly 100 percent over 2016. The interests of sustainability and profit are conflicting, but sustainability is a social expectation and more than a trend, he noted. In some cases, the investor taking into account the ESG principles may realize an additional return, with an overperformance of 1.8% over the examined 12-year time horizon.
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Source: Portfolio.hu – Befektetés by www.portfolio.hu.
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