A few days before the national legislative elections, Investors have already begun to wonder what bonds and other financial assets to buy to cover itself in case the ruling party suffers a bad result, which would have a negative impact on the stock market. According to experts, there are some interesting alternatives to consider.
Although it is not known exactly how Javier Milei’s government will fare this Sunday, the truth is that political and economic instability and what happened with the elections in the Province of Buenos Aires (PBA) awaken market fears.
In this framework, financial specialists recommend hedged with negotiable obligations (ON), investment funds and stock options.
Corporate bonds lead
According to the financial advisor Arian ChiarandonONs or hard dollar corporate bonds continue to be among the best coverage options, especially those of high credit quality.
“You have to be very precise when choosing the corresponding assets in dollars of very good credit quality, but above all that are not so punctually expensive in pesos,” said the executive.
From his point of view, not many bonds meet these characteristics. Some are the titles YMCJ from YPF, CS49 of Cresud, VBC1 of Grupo Financiero Valores, TLCQ of Telecom Argentina and ZZC1 by Camuzzi.
These assets allow collect a periodic income in dollars and have a stable portfolio ahead of the legislative elections on October 26.
More alternatives for investors
Besides, Christian Solomonfinancial advisor and director of Vinver, agreed that, if an unfavorable scenario for the market were to occur, the most prudent strategy would be to dollarize the portfolio, but by investing in financial instruments.
For this reason, he recommended two attractive alternatives: “Boprealesdollar bonds that mature during the current term and yield about 13% annually. With the backing of international organizations and the support of the US, the risk of non-compliance is low. Also common investment funds in dollars composed of corporate negotiable obligations, which offer average returns of 6% per year, with less exposure to sovereign risk.”
“There are no magic recipes or safe bets. The key is to diversify, define objectives and not get carried away by the emotion of the moment. Elections pass, but good financial decisions last many years,” said Salomón.
Direct coverage before the elections
Meanwhile, those who have Argentine stocks in their portfolio and fear that prices could fall starting Monday, can put together somewhat more sophisticated strategies with financial put optionswhich act as a kind of insurance.
“If a person wants to be positioned in stocks and wants to be covered, the simplest strategy is to buy puts and put together the so-called put protective strategy. Today it is a little late to do so because, depending on price falls, puts are expensive, but it is better to have expensive insurance than not to have it,” said the consultant and options specialist. Mariano Pantanetti.
“A problem that the local market has is the lack of liquidity, but, if you manage to put together one of these strategies because there is a market, it can be an interesting possibility of profit at a time of high volatility,” he added.
Source: Ambito
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