Sabrina Corujo, director of PPI, maintained that “The combination of the diversification offered by these assets (even facilitating exposure to the international market) and their operations in pesos, such as the coverage they allow against the movement of the exchange rate, aroused the interest of local investors.”
In that sense, he added “that in addition, they were thirsty for new instruments, in a market with limited supply and regulations that restrict dollarization options.”
Damián Vlassich, Research analyst at IOL investonline, highlighted that “The interest generated by these investment alternatives was significant” and recalled the good initial performance, noting that “during the first day they were released on the market, the ETF that replicates the main US index (S&P500) managed to quadruple the volume traded by YPF and Grupo Financiero Galicia, two of the most representative shares of the Merval. Meanwhile, on its second day, the S&P500 ETF exceeded 1,000 million pesos in trading volume, growing more than 15% compared to the first day.
In relation to the volume currently operated, Corujo indicated that “Only three concentrate around 60% (the SPY, XLE and QQQ), while, at a general level, these instruments represent an average of 8% of what is traded in equities. Moreover, by double-clicking on the last month, stock Cedears and ETFs account for just over 70% of this amount, leaving less than 30%, consequently, for local stocks”.
Vlassich, for his part, expressed that “despite the great first initial boom, it cannot be overemphasized that currently, the volume operated is around 100 million pesos (according to the close of Wednesday, March 23) Although it seems like a much lower number, it is enough to place SPY (such is its ticker) among the 5 most traded CEDEARs.
The ETFs that yielded the most
The ETFs that posted a positive performance so far this year are only two of the 9 available in the local market. “One of them is XLE, a fund made up of companies in the energy sector, and another is EWZ, a fund made up entirely of Brazilian companies. Both currently register growth of around 14% and 22%, respectively,” Vlassich specified.
Corujo agreed and explained that this is due to the international context, which led to “selectivity”, at the hands of XLE and EWZ, which were promoted because “The energy sector is tied to an oil price that rises +45% in the year; and Brazil favored, among other things, by the recent rise in commodities”.
Continuing along these lines, Vlassich appealed to the impact of the North American market by pointing out that “it cannot be ignored that 2022 had a turbulent start for the main US markets. After reaching maximums in the first days of January, the three main North American market indices, S&P500, Nasdaq and Dow Jones, had a strong correction that lasted until the first days of March where they accumulated falls from 10% to 21% in the case of technology companies”.
He also added that “to this we must add that, simultaneously, there was a strong appreciation of the exchange rate (taking the CCL free exchange rate as a reference), which after reaching maximums close to AR$ 230, cut its value by 18% and returned to a price close to AR$ 190. This situation caused the CEDEARs ETFs to be hit twice, on the one hand by the strong correction experienced in the United States and on the other by the appreciation of the peso “.
future scenario
Both analysts agreed to mark volatility as the axis of the performance of the new tool of the national financial market.
Corujo estimated that “volatility will continue to be a characteristic until the external scenario clears up. Geopolitical tensions, the withdrawal of the stimuli put in place (monetary and fiscal) during the pandemic and their impact on growth, and the Increasing inflationary pressures will be factors that will maintain uncertainty and may weigh on prices at times, maintaining in this framework the rotation of stocks from growth to value, and therefore the importance of maintaining a growing selectivity when building a position”.
Vlassich, meanwhile, expressed: “We project a year marked by volatility, where the extension of the armed conflict will be one of the variables to watch closely without a doubt.” He also indicated that “on the other hand, we will also have to focus on the monetary policy carried out by the Federal Reserve”, noting that “although the first rate hike was already validated during the last Open Committee held in the month of March and Jerome Powell communicated the roadmap for the coming months (at least six additional rises should be expected), it is not ruled out that this could generate noise in the future”.
In this sense, he assured that they see “value in the ETF of the financial sector, XLF. The fund in question was punished during the first months, so it has a way to return to the most recent highs, which it could reach with the impetus provided by the context of rising rates”.
“Precisely for this reason, we consider taking precautions in taking exposure to the ARKK, a fund made up of technology companies with an innovative profile,” he added.
In this regard, he clarified that “this ETF weights highly disruptive companies, but which are still in an incipient stage in terms of the development of their technologies and that, in many cases, they are still companies that do not generate profits.”
Along these lines, he pointed out that “this type of sector, in a context marked by an aggressive Fed, is affected since the rate hike directly affects its valuation.” Finally, he expressed that “beyond the oil rally, an aggressive profile should maintain a position in XLE, since it is an asset that reacts strongly to any news regarding the Russian conflict.”
Source: NA
Source: Ambito
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