Saving in shares of highly recognized companies in the activities of any family is a common practice among Americans, but it is not common for Argentines.
However, from the country and in pesos, you can invest in first-line companies and have a part of their capital and their performance.
The instrument to do so is the Argentine Certificates of Deposit (Cedear), which represent shares in a foreign market, but are traded in the local stock market.
In this way, anyone with a client account can buy or sell, in pesos, the equivalent of shares in companies such as Apple, Google, Amazon, Netflix, Walmart, Microsoft, Tesla, Alibaba, Coca-Cola, Citigroup or Walt Disney, to name a few.
It also allows access to Argentine companies listed in New York, such as Mercado Libre or Globant, and Brazilian firms such as Petrobras, Vale or Bradesco.
In addition, it offers the possibility of following movements commodities like gold, through firms like Barrick Gold or Yamana Gold.
The Cedear have existed for many years, but from the last quarter of last year the volume traded multiplied.
“When Tenaris and Petrobras stopped listing on the Argentine market, operations with Cedear increased. They went from around 200 million pesos a day until September 2019 to more than one billion today and represent 40 percent of the volume of variable income “explains Carla Daniele Barra, analyst at Dracma.
Lucas Croce, from DLC Asesores Financieros, adds that there was a work by Byma (Argentine Stock Exchanges and Markets) to give volume and depth to this tool. Something very important to “give the liquidity that the investor needs to enter and exit.”
Dollar and yield
For Argentines who are always looking at the dollar, one of the main attractions of the Cedear is that the papers replicate the price of the US currency.
In this way, through an instrument that is traded in pesos (and does not require going through the exchange market), you can have exchange rate coverage.
“The fact of being a good hedging instrument against movements of cash with settlement (CCL) is one of the factors that explain the increase in volume,” says Daniele.
For this reason, the Cedear also allow the purchase of a CCL dollar, by acquiring the instrument in pesos and selling it in foreign currency (with the restrictions that were imposed in recent months).
Anyway, whoever wants to operate in pesos can do it and keep the papers as an investment.
In the latter case, specialists warn that, although it provides coverage against the dollar, it is an equity tool that moves just like the original shares.
“Future profitability has a certain degree of volatility. The investment has to take into account the risk profile of each one ”, adds the Dracma analyst and recommends consulting, knowing the asset well and taking into account the moment of entry, that is, the purchase.
“You have to be careful, because they are shares and, as such, they are volatile assets,” Croce agrees.
And he points out: “It may be that a possible drop in the market or in the Cedear cancels the effect of the exchange rate hedge. Especially at these times, in which the markets are very high, they had a very rapid recovery, in the form of a ‘V’, after the fall due to the coronavirus. Whoever enters these levels today could have a headache if there are major corrections. ”
In any case, beyond possible swings, for a medium or long-term investor, the shares of these companies are an interesting refuge, since they allow companies and sectors of the economy to be chosen that could have great potential, such as technology, mass consumption , gold, banks, laboratories or energy.
How to invest
An Argentine saver has to open a client account with his Stockbroker (Alyc) and operate in pesos.
An issue to consider is the ratio conversion, says Daniele. That is, how many actions from abroad does a Cedear represent.
For example, Apple has a value of 0.10, which implies that you have to buy 10 Cedear to have the equivalent of one share.
The operations have a minimum equivalent to one share, therefore, it is necessary to consider both the values of each Cedear and the ratio to see the amount to invest.
For example, Globant has a ratio of 0.5 and it is quoted near 9,900 pesos, so they must be bought in multiples of 19,800 pesos.
Instead, Mercado Libre, with the same ratio, It is about 62,500 and requires disbursements of 125 thousand.
There are other more accessible cases in amounts such as Barrick Gold, which is around 3,500 with a ratio one’s; or Coca Cola, with a price of 1,140 pesos and a ratio 0.2 (you can buy it in less than six thousand pesos).
Dividends. A final point that may be attractive is the ability to collect when companies distribute annual dividends.
Top 10 most traded
(Participation in the Argentine market. Last 40 wheels)
- Manzana. 9.2%
- Barrick Gold. 7.8%
- Free market. 6.1%
- Bradesco Bank. 4.6%
- Petrobras. 4.4%
- Microsoft. 3.8%
- Amazon. 3.7%
- Wells Fargo. 3.3%
- Coca Cola. 3.2%
- Tesla. 2.5%
The ones that went up the most in a year
- Tesla. 471.8%
- Free market. 188.8%
- Amazon. 177.6%.
- Yamana Gold. 176.7%
- Barrick Gold. 157.8%
- Globant. 153.5%
- Netflix. 142.1%.
- Microsoft. 108.2%
- Manzana. 108.1%
- Alibaba. 87.7%
- Walmart. 81.2%.
- Alphabet (Google). 80.5%
Source: Argentine Capital Market Institute. Closing on July 28, 2020.