best and worst investments after 1 month quarantine

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This Monday was the first month since the Government decreed quarantine. How investors fared in volatile dollar times

Today is a month of validity of the quarantine. The economic consequences of the brake on the economy began to be seen and in the last 30 days it is very complex to find assets that have posted a return.

In Argentina, however, the dollar stood out again. Although the official price has barely increased 6% since March 20, the star of the month was the stock exchange rates, which are accessed through the simultaneous sale and purchase of bonds.

The Mep dollar, which allows you to obtain the dollars and deposit them locally, advanced more than 14% between ends. Today the Mep closed at $ 104.23 but last week it hit highs of $ 115.

“Although today it reversed part of the rise, the traditional winner is the Mep dollar, which went from $ 85 to $ 115 in recent days. It continues to have more than good profitability,” said Maximiliano Bagilet, financial analyst at TSA Bursátil. And he added: “The dollar was the star, as in all emerging markets. At the local level, perhaps not as much was seen because the official exchange rate is trampled and is already registering a significant delay with respect to our business partners. ”

The cash settlement, meanwhile, is the exchange rate used to deposit the dollars purchased abroad. Today, it closed at $ 105.27, which meant a 15% rise from the first day of the mandatory quarantine. Like the Mep, the cash-counted liqui also set records last week.

In the last 30 days, the rise in stock market dollars dominated the scene

“The asset that rose the most in recent times was the dollar, accompanied by the Merval index for some days and with some recovery in bonds with the completion of the exchange offer, “said Diego Demarchi, wealth management manager at Balanz.

As explained by Alberto Inga, investment director of Megainver, the rise in the exchange rate was justified from the drop in interest rate in local currency that “it moved the dollar that is operated through securities to levels close to $ 110, to stabilize in recent days at around 100 pesos per dollar, quite far from the oficial official dollar’. Therefore, The big winners are all the assets related to the evolution of the exchange rate with settlement and as a big loser to the assets that follow the interest rate in pesos.

Along these lines, Damián Zuzek, chief investment officer of the SBS Group, agreed with his colleagues and referred to the situation of the local saver. “He is in front of a difficult scenario, crossed by Covid-19 and all its collateral damage linked to the slowdown in the economy. Added to this, Argentina is in a process of sovereign debt restructuring and the system pressured by the exchange rate and negative real interest rates in local currency, “he said.

Shares: gains in pesos, liquefied

Local actions, which they had closed March on negative ground, recovered ground in the last 30 days and show increases in pesos. The leading index of the Buenos Aires market, the S&P Merval, up 27.8% in the period.

Among the main panel papers, the biggest increase in the last 30 days was for Cablevisión Holding, whose value increased 66.5%. They were followed by Aluar, with a rise of 52.9%, and Ternium, which advanced 44.6%.

Nevertheless, the rise in the exchange rate liquefied those gains in pesos, so analysts were not very enthusiastic about the performance of local equities.

The rise in the dollar liquefied the gains in pesos of the shares

“The sharp rise in this dollar (both the one that is operated against currency and against Mep) generated a revaluation of some assets that accompany this exchange rate, is the case of the actions. Almost all this rise in the Merval in the month is explained by the exchange rate counted with liquidation, “argued Inga.

“Many stocks fell below their all-time lows, as was the case with YPF, which is below u $ s4. Oil companies are also being affected by the collapse of the oil price, “Bagilet added.

Today, the future of crude oil (WTI) with delivery in May it sank 300% and closed at an unprecedented negative value. It was $ 37.63 per barrel. “In general, the losers were energy companies like YPF or Pampa Energía. They have many projects with Vaca Muerta and oil had a very important drop because the closure of the economies generated a lower demand and there is no place in the world to keep it. That is why the position suffered so much in May, because the market sees it as a short-term problem, “said Flavia Matsuda, research coordinator at InvertirOnline.

Bonds: the uncertainty of debt

Regarding the bonds in pesos, Bagilet pointed out that the shortest had a 20% direct return. “However, profitability is not as attractive when you consider the rise in the implicit exchange rate,” he acknowledged.

According to Personal Investment Portfolio (PPI) calculations, the asset that rose the most in the month, with an increase of 31.3%, was the Boncer 2020 (TC20) which expires next week.

Uncertainty regarding how the government would deal with the debt issue, altered the spirits of investors

“There was a lot of uncertainty regarding the position that the Government would take, after it postponed the payment of the Dual Bond. After the successful swap last week, about 15% of the total remained in the hands of the private sector and today the market discounts that it will be paid“said Santiago Abdala, director of PPI.

Regarding the dollar securities curve, the specialist also said that the Discount, the Bonar 20 and the Bonar 24 showed increases of 30.25%, 28% and 20.5%, respectively, in their versions in local currency. However, he stressed that “a good part of this rise is explained by the increase in cash with liquidation”.

To cover

The pandemic created uncertainty at the global market level and investors are therefore seeking refuge assets. “The gold it always works this way. At the end of March, it had been down because there are many leveraged funds in the world, that is, they take on debt and must leave collateral. As the markets fell, the collaterals lost value and they had to sell their positions in gold to go out to cover those margins. After that moment, the price recovered and last week marked maximums of u $ s1700“Matsuda commented.

On the same tune, Jorge Fagnani, Portfolio Manager of Grupo Cohen, pointed out: “Since March 11, the day the last bull market started in March 2009 ended, the safest assets, called ‘Safe Haven’, performed well, such as example the Gold (+ 8.2%) and the American Treasury Bonds (+ 3.8%)

For those who want to invest from Argentina in gold, Matsuda reported: “The only option is cedears of mining companies, which mine gold, like Barrick Gold. They are papers that are also tied to the evolution of the exchange rate. Therefore, yielding rose a lot not only because the stock increased abroad but also because the cash price with liquidation shot up. “

The specialist of InvertirOnline also indicated that in the US market there were some actions that benefited in a context of general uncertainty.

“In contexts like this, investors turn to shares of mass consumption companies, such as Walmart; basic services; or health. However, in this particular crisis the telecommunications sector joined. There, a role that we are recommending and has yielding available is that of Netflix. On the other hand, in basic services there was no good news because consumption fell by companies, “said Matsuda.

The sectors of technology and basic consumption were able to avoid the effects of the crisis, while the financial, energy and public services sectors were the most affected, “agreed Fagnani.

From Balanz, meanwhile, Demarchi also pointed to the cedears as an alternative to protect capital. “It can be bought in pesos from Argentina and they give the client hedging against the movement of the exchange rate and, in turn, participation in leading international companies such as Amazon, Apple, Google or even leading companies in the oil industry, such as Shell or Exxon Mobile, taking advantage of the sharp drop in their prices during the pandemic ” he pointed out.

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