Risks and opportunities. Where should you invest in 2022?

Uncertainty and volatility. Those are the two words that economists used to define 2022, a year that brings news on all fronts. In Argentina, negotiations with the International Monetary Fund (IMF) will be a driver fundamental for local investments in the coming months. At a global level, the advance of the pandemic, geopolitical struggles, inflation and the change in monetary policies are among the topics that should be closely monitored.

Faced with such a scenario, when building an investment portfolio, the priority must be prudence. When consulted with LA NACION, different specialists evaluated which are the most attractive instruments for the different contexts, their risks and opportunities. “In 2020 everything flew by the arrival of the Covid and the injection of money. Last year was one of great uncertainty, where the volatility began, but the indices abroad continued in areas of maximums. This year, volatility will increase and there will be great uncertainty, this is very clear, ”said Fernando Camusso, director of Rafaela Capital.

A first warning: in a year that will be marked by key news for the market, the investor will have to build his portfolio with the first quarter in mind. March could already be another story.

It is advisable for investors to build their portfolio with the first quarter of 2022 in mind
It is advisable for investors to build their portfolio with the first quarter of 2022 in mindShutterstock

Cedears: an investment tied to the dollar (and international volatility)

Argentine Certificates of Deposits, better known as cedears, have become in the last two years one of the preferred assets of Argentines: in 2021, they represented approximately 70% of equity transactions. This tool allows you to invest in pesos in the great companies of the world -like Coca-Cola, Apple or Disney-, although the price is tied to the variations of the dollar counted with settlement (CCL). That is, an indirect way of dollarizing.

To this was added that last Friday, the National Securities Commission (CNV) released great news for the local market: through the cedears you can also acquire the so-called ETFs -exchange-traded fund, in English, or listed investment fund-. These instruments track the performance of another asset, which can be an index (S & P500), a sector (such as technology) or a commodity (gold). Initially, nine international ETFs will be able to operate in pesos from the country.

Some savers bet on Argentine Certificates of Deposits to indirectly dollarize
Some savers bet on Argentine Certificates of Deposits to indirectly dollarizeShutterstock

The cedears, either through the purchase of the shares of a firm or through ETFs, are a way of run the Argentine risk. However, the economists summoned pointed out that 2022 will not be a quiet year for the international market either.

According to the Bloomberg Markets Live Global survey, inflation will be the central theme that will run through the entire year. According to Nery Persichini, strategist at GMA Capital, this source of uncertainty is related to the monetary policy that different countries will adopt. “As fine tuning and balance will be necessary to move on the edge of a razor, the process of disarming the monetary stimuli of the large central banks in the face of inflation peaks not seen in 30 years will be quite the opposite of the ‘tailwind’ for the world. In particular for emerging markets, dependent on both capital flows and commercial income through commodities ”, he analyzed.

In this context, attention will be placed on the decision made by the United States Federal Reserve (Fed) regarding the reduction of purchases of Treasury bonds (tapering) and the increase in interest rates. “We will have to wait a bit for the purchase of cedears, because you have to see how aggressively the Fed will withdraw the stimulus on the economy. In case of investing, it would be necessary to lean towards companies that have less debt, less dependence on third-party capital. In a scenario of rate increases, the highest returns will be in companies that do not have financing, “said Walter Morales, president of Wise Capital.

Other international risks in 2022 are the pandemic, with the arrival of new variants and eventual restrictions, and geopolitical tensions. Persichini remarked that these are not “harmless” risks since in the past they showed capacity to damage the economy and markets.

“Cedears are risk assets, therefore, in a year of volatility, we must take into account the scenario that is presented. In 2022 it is advisable to make a selective investment. For example, you would search for companies in the energy sector, utilities, cyclical companies. I like those to have as an investment. Instead, technology companies are likely to suffer the most, ”Camusso said.

Badlar, CER and dollar-linked: coverage against three main factors

During the year there will be three variables to follow closely in Argentina: the movement of the official exchange rate, inflation and the rise in rates of the Central Bank (BCRA). And within the universe of debt in pesos, there are options to cover or take advantage each one of them.

In the first place, all the economists agreed to include in the portfolio a portion of Badlar bonds (which is adjusted by the reference of the rate of the fixed terms). Especially considering that last week the Central Bank increased the interest rate by two points, up to 40%. “Those funds are going to preserve value quite well, so they become a good refuge ”, argued José Echagüe, Head of Strategy at Consultatio Investment.

While, assets that adjust for CER (inflation) are still attractive, having been the star investment in 2021 (the Boncer accumulated a rise of 71.5%). “If you think that inflation will be between 58% and 70%, then you have to think about CER bonds. But you have to take into account the inflation of November [desaceleró a un 2,5%], since that could leave them below expectations ”, added Morales.

The last alternative is dollar-linked assets, which are subscribed and paid in pesos, but their value is anchored to the variation of the official exchange rate. In short, a way to cover yourself against a possible devaluation jump. If the objective is to see gains from a potential acceleration of the crawling-peg (daily devaluation) or exchange rate jump, this year they could be an option.

“It is necessary to consider a possible change in the exchange rate regime and a very probable acceleration of inflation over the next few months, driven by the lag in the very high rate of monetary assistance from the BCRA to the Treasury during 2021, which represented the 4th, 6% of GDP. The current situation of extreme shortage of net reserves forces us to question how long the Central Bank will be able to stretch this situation without a exchange rate honesty ”, said Pedro Siaba Serrate, research manager of Portfolio Personal de Inversiones (PPI).

However, the expert warned that it is likely that “the mistake” of Axel Kicillof will be repeated in 2014, when he was Minister of Economy. At that time, it tried to reverse the exchange rate delay by accelerating the exchange rate in line with inflation. “Without a reasonable economic plan, the success of this path was short-lived. After the devaluation of 2014, the price level had incorporated 65% of the exchange rate movement in the first 6 months and had absorbed 98% per year. As it is not possible to know the moment or the magnitude of the movement of the exchange rate or the speed of transmission from the devaluation to inflation, we believe it is prudent to keep the portfolio in pesos diversified, “he said.

Debt swap bonds: for the risky, the agreement with the IMF as a bet

An agreement with the IMF could be a “Window of opportunity” for those investors who have a more aggressive profile. Last week, Minister Martín Guzmán admitted that the negotiations are hampered by disagreements about the fiscal path that the country should take, something that had a special impact on the bonds of the last debt swap.

However, the economists consulted considered that, despite the delays, an agreement will be reached by March and, as a consequence, sovereign securities will be pushed up. Betting on this scenario, Casmusso said that the strategy would be to enter with the current prices of subsoil and exit when a definitive agreement is announced, weighing the bonds that operate under foreign law and with maturities in 2038.

“The novel with the IMF and the presentation of a consistent economic plan are the drivers clearer to unlock a climbing scenario, even when a headwind is blowing globally. Of course, investors should consider other risks when leaning towards bonds ”, they observed from GMA Capital.

Finally, Siaba Serrate emphasized that sovereign securities are only recommended for the riskiest portfolios. “It is very difficult for Argentina to avoid a new restructuring between 2024/25 (when the maturity profile becomes more bulky), but current prices are already discounting an extremely aggressive restructuring. Having said this, in the face of a change in expectations, which may only awaken in 2023, we consider that the instruments may have a upside considerable. Therefore, we prefer low parity exposure in Global 2035 ″, he closed.

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Helen Hernandez is our best writer. Helen writes about social news and celebrity gossip. She loves watching movies since childhood. Email: Phone : +1 281-333-2229

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