The financial dollars and the blue went through a week of strong volatility, reaching historical nominal highs, as a consequence of greater dollarization of portfolios. Given this panorama, expectations of devaluation increased, which were reflected in the future dollar markets and in the Common Investment Funds (FCI) industry.
The financial dollars and the blue went through a week of strong volatility, reaching historical nominal highs, as a consequence of greater portfolio dollarization due to the shortage of foreign currency, electoral uncertainty and the deterioration of macroeconomic conditions. Thus, the gap with the official dollar already averages 170%. Faced with this panorama, and with the proposals of the main candidates on the table, expectations of devaluation increased among investors, which were reflected in the future dollar markets and in the industry of the Common Investment Funds (FCI)with increases in flows to dollar-indexed funds.
So far in October, FCI dollar linked net subscriptions were $95 billion, for a greater search for coverage. Thus, in the first days of the month they reversed the negative trend they had in September, for $13,540 million, given a more conservative positioning on the part of investors.
Eduardo Herrar, CEO of IEB Fondos, highlighted: “These behaviors are part of an environment of volatile and changing expectations from minute to minute along with measures that further tighten the stocks, leaving dollar-linked instruments as one of the few alternatives through which companies can seek coverage without violating regulatory restrictions. On the other hand, the flow of sales and the fall in prices of linked dollars during the last days of September had left them very attractive (even assuming a possible restructuring during the next government), especially when taking into account the rise in both “financial dollars and dollar futures.”
On the other hand, according to Adcap data, the rest of the industry presented negative flows of $201,593 million. On the one hand, the T+1 segment had rescues worth $107 billion so far in October. The CERs had the same dynamic, with exits of $78.8 billion in the same period, as in September, when they had rescues of $45.3 billion.
Likewise, $85.1 billion came out of the Money Market segment during the first 10 days of October. It is worth mentioning that immediate liquidity funds represent 50% of the industry and were the ones that received the most money throughout the year. So far in 2023, the T+0 funds had redemptions in June alone for $234,946 million. In the rest of the months, they accumulated subscriptions of $1.6 billion.
Forward, Nicolas Calabriaportfolio manager at Adcap Asset Management, said: “We estimate that the demand for linked dollar products will remain constant and that it will increase the week before the elections, just like what happened in the PASO: the previous week there were “There is a lot of demand for dollar linked coverage, not only for corporate bonds tied to the official dollar, but also for sovereign bonds, Rofex and in the dollar linked funds there were many subscriptions in the week before the primary elections.”
Along these lines, he detailed: “Prior to the PASO, the Ministry of Economy had regulated a new exchange rate for regional economies at $350 when the official one was not yet there. The new official exchange rate became the 350 that they had previously established. Now, there is fear that it will happen again, because now they have set a new exchange rate for regional economies, which implies 75% official settlement and 25% cable settlement, and that gives an exchange rate of between $450 and $500. So, if the same PASO situation is repeated, that could be the new target exchange rate, so many investors will be afraid that a new devaluation jump will be generated the day after the elections. We estimate that, to avoid this loss of purchasing power, many investors are going to pay for coverage at any cost.”
Source: Ambito
