The latest Financial Stability Note published at the end of July by the National Securities Market Commission warns that market risk - especially that linked to technology stocks - is the main financial vulnerability in international markets and the exposure of Spanish investment funds is average.
On the other hand, in fixed income, the impact on inflation from the war in the Middle East has caused an upward shift in interest rate expectations. Spanish investment funds have a high exposure to fixed income (64% of managed assets), but limited sensitivity to rate increases, due to the short duration of the portfolios (modified duration of 1.94).
In equities, although in general stock prices continue to be supported by corporate profit growth, certain segments related to technology and artificial intelligence (AI) exhibit demanding valuations relative to their historical averages and account for an increasing proportion of trading in equities.
Furthermore, the latest initial public offerings of US technology companies that have taken place or are expected could exacerbate overvaluation and concentration problems. In this context, the total exposure of Spanish investment funds to technology companies is limited (11%), although it is substantial in equity funds (31%).