A few weeks before the end of the year, if there is a certainty shared by the various market players is that inflation in 2022 will close around 100% and that figure unlikely to drop in 2023. Facing a year with multiple challenges in the local market, investors have started to calibrate theirs options for navigating an economy with one where prices tend to double in a year.
The latest Market Expectations Report (REM) published by the Central Bank last Wednesday It showed that Council’s top advisers expect inflation to close this year near 100% and stay in this area at the end of next year. Respondent consensus forecasts 96.4% inflation for December 2023, and this projection represents a 1.5% increase over the previous survey.
Martín Polo, Cohen’s chief strategist, explained: “November inflation will likely be below 6%, but everything seems to indicate that it will be an exception and that in December it would exceed that number again, in part due to the seasonal impacts typical of that month”.
At the same time, the economist added: “Taking into account the tension on exchange rates and the ever more numerous restrictions on imports, 100% annual inflation looks more like a floor than a ceiling for 2023. Investing in this scenario is not easy.”
For the Argentinian investor options keep appearing in the local market, but with greater uncertainty about the Government’s ability to meet all of its peso maturities in the coming years, the common recommendation is caution on this type of investment. At the same time, the latent probability that the exchange rate gap will warm up again forces investors to prefer short-term assets.
Polo recommended, on the one hand, investing in: “A TO23, which is a fixed-rate Treasury bill maturing in 2023, has a parity of 57% and an effective annual yield of 130%, incorporating higher inflation to 120% by mid-2023”
At the same time he added that CER titles, linked to long-term inflation “show attractive parities in terms of the protection they can provide in the face of an event with the debt in pesos. For more risk-averse investors, we find these attractive options,” she said.
In this direction, Juan Manuel Franco, of the SBS Group, underlined: “We continue to favor short duration CERs despite government optimism on inflation in November”.
Within this universe, Maximiliano Donzelli of IOL, investing online, explained: “For those who want to invest thinking about short-term expenses, such as holidays or school expenses in March, we suggest adding the letter X19Y3, which adjusts the capital for CER expiring May 2023. This instrument has a yield of 3.5% per annum above inflation.”
“On the other hand, e for those low stake investors or wishing to have a simple option, there is the AdCap Wise Capital Growth mutual fund, whose holdings have a large percentage of CERs maturing before 2024,” he said, adding that this fund offers both inflation and currency hedging, as it invests in both CERs and dual bonds.
NS
Source: Clarin
