Home » Economy » what to bet on in the second half of January 16 January 2022
Tensions with the IMF have caused major dollar sovereign bonds to fall by up to 13% since the start of 2022, whose prices are very close to their lowest since the swap with private bonds in 2020. Thus, country risk has reached its highest level since the end of November, close to 1,900 basis points.
In the face of doubts, Maximilian Bagileyou, financial adviser to TSA Bursátil, recommended this medium to avoid these titles despite their depressed values. However, for investors who accept some risk in their portfolio, he acknowledged that “sovereigns below 30% parity (relative to their technical value at the time of issuance) become attractive”.
In the event that the investor opts for this alternative, the analyst sees more potential in global bonds (under foreign law), since they can benefit from a greater appetite from international investors in the event of an agreement with the Funds.
For his part, Andrés Nóbile, director of investments at MegaQM, projects that dollar bonds have room to recover ground in the event that the debt to the institution led by Kristalina Georgieva is restructured, taking into account that the current prices “reflect values”. which are only compatible with aggressive restructuring processes in the short term”, and that the assets have a high interest rate.
Nevertheless, for the dollar-positioned investor who sees a high risk of disagreeing with the IMF, Nóbile suggested Marketable bonds (ON) in foreign currency. Bagilet also looks favorably on corporate dollar debt, “focusing on securities maturing in 2023 and yielding around 8% per annum, while recognizing the potential of certain instruments such as ON YPFs until 2026, with periodic amortizations from 2023 and yields between 13% and 14%”.
Investments in bonds in pesos
As for investments in pesos, the market is carefully watching the race between inflation, the exchange rate and rates. About 10 days ago, the BCRA raised the nominal annual monetary policy rate from 38% to 40%, implying an effective annual return of 48.3%. Likewise, it seems to have adjusted the rate of devaluation; The wholesale dollar is heading for a monthly rise of more than 2% in January, which hasn’t happened since March 2021.
Both corrections are still insufficient to beat inflation, which in 2021 reached 50.9%, in December it was 3.8% and it is estimated that it will continue to be around 3% per month in the short term. term.
Santiago Abdala, director of Portfolio Personal Inversiones (PPI), warned in conversations with Ámbito that “given the good performance of CER stocks (they are up more than 70% in 2021, on average), this could be the good time to reduce exposure in these assets.
In this sense, he clarified that, although they maintain inflation-linked assets as the main component of the recommended portfolios, at the moment of PPI assign a greater weight to bonds indexed to the dollar or with adjustable badlar rates. The specialist believes that the drop in seasonal demand for pesos since the end of January, added to a greater than expected impact of the drought on the liquidation of foreign currencies, risks increasing the pressure on the exchange rate, and by the same opportunity on the need to raise rates again.
In TSA Bursátil they also recommend investing a significant portion of the portfolio in Dollar Linked. “A real exchange rate at levels below 2018 gives us a clear indication that exchange rate control, in relative terms, will not be sustainable any longer,” Bagilet said.
Like his peers, Nóbile sees seeking dollar hedging as a good option, which can be done through mutual investment funds (CIFs) such as Megainver Fixed Income Hedging or Quinquela Mixed Income. Additionally, he pointed out that Quinquela Total Return and Megainver Absolute Return are attractive FCIs for those looking to hedge against inflation.
“Rising rates have had an impact on the peso yield curve, but the current levels are not enough, given the inflationary pace, to reach positive rates in real terms. In other words, inflation continues to be higher than the interest rate. That’s why we always prefer indexed instruments,” he said.
Internationally, it is the Fed’s monetary policy tightening that is attracting the most attention. At their last meeting in December, most US central bank officials stressed the need to raise rates earlier than expected and reduce holdings, in a bid to tackle the highest inflation in nearly 40 year. in the main power of the world.
The Fed’s more aggressive stance tends to hurt so-called “growth” stocks like technology. That’s why the TSA looks favorably on profit-taking in the said sector, “turning to the industrial sector or emerging markets”.
At the same time, for those who want to bet on the equity segment, Abdala highlighted ETF Cedears as a “great option” which has recently started marketing in the local market. “The North American employee has, within his pension fund, a quota of investments, for example in the S&P 500. Having access to this in pesos is an excellent solution”, he pointed out.
So how is the bag?
With all the factors mentioned above influencing the investment strategy, TSA suggested building the portfolio as follows: 30% in marketable bonds, 20% in CEDEAR (Coca Cola, AT&T, Verizon, Exxon, Citi, Goldman Sachs and Walmart) , 20% in Dollar Linked bonds, 10% in CER bonds and 20% in dollar liquidity, “accessing the free exchange rate (MEP), pending a correction in the dollar bond market”.
In short, the various proposals have in common the presence of indexed assets, with a greater presence of securities revisable at the official exchange rate compared to previous months. As for dollar bonds, the choice depends on how the “risk vs price” dilemma is weighed, while among equities, Cedars (chosen selectively) are the most recommended option.