20,000 meetings with companies provide a lot of information: this is how the most powerful executives on the planet confess to Fidelity

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By TP


Fidelity, based in Boston (USA), is one of the largest fund managers in the world. It has 50 million clients and manages assets valued at five trillion dollars. Far from the so-fashionable passive management, the firm specializes in finding attractive companies to invest in. This strategy leads its analysts to hold more than 20,000 meetings with companies a year. In other words, every 10 minutes—taking into account workdays—some member of your team has an interview with business executives. This frenetic activity provides Fidelity with a privileged view of economic and business sentiment on the five continents, which it distills each year in its annual Analyst Survey. In the 2024 report, published exclusively by EL PAÍS, the main conclusion is that companies listed companies, although cautiously, are preparing for the new economic cycle that is to come. While a year ago there was widespread fear that the global economy would enter a recession, current sentiment suggests an improvement in market sentiment. Specifically, half of Fidelity analysts affirm that the sectors they cover are in a phase of economic slowdown and only a small group in a recession. One of the big changes with respect to the situation that existed 12 months ago is that inflationary pressures, although they have not completely disappeared, have eased considerably. “Nobody is talking about inflation anymore,” says Brendan Cochrane, a Fidelity analyst who follows consumer discretionary companies in the US. “Wages were the last complication [para que los precios bajasen], but these seem to be normalizing as well,” he adds. Most of the manager's analysts expect improvements this year in those industries they cover. In this sense, the number that affirms that their sector is expanding goes from 52% currently to 61% who expect this to be the situation in a year's time. However, optimism goes by neighborhoods. There are several businesses where analyst responses suggest that conditions could worsen as the current year progresses. For example, experts who follow oil and gas companies in the United States warn that company directors recognize that raw material prices, declining after the heat they experienced after Russia's invasion of Ukraine, are a ballast. The financial sector is the other sector where there is caution, in their case because they fear that the end of the cycle in the increase in interest rates by central banks will translate into a narrowing of their margins. In 2023, when the global recession was on the table and the price of money did nothing but rise, the focus was placed on those most indebted companies. The current environment, however, seems more favorable for balance sheet management. “Our analysts have come to the conclusion that the majority of companies can postpone refinancing their debt again,” point out the authors of the survey. From a geographical point of view, the equity market that generates the greatest expectations is the Japanese. The Japanese stock market has returned to highs three decades later, but the general feeling is that it still has the potential for revaluation. “Expectations for corporate revenue and profit growth in 2024 in Japan are higher than in any other region. The analysts who cover this market are also the most optimistic in relation to the expansion of profit margins”, concludes Fidelity's work. Follow all the information from Economy and Business on Facebook and xor in our weekly newsletter

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