Fury over FCI dollar linked forced some managers to make a drastic decision

The demand for exchange coverage was reactivated very strongly through of Dollar securities Linked, who had lost appetite after the PASO. Investors are seeking to get rid of the pesos by projecting a scenario of devaluation of the official exchange rate after the presidential elections. Precisely subscriptions to this type of FCI strongly pressured the price upwards, which led to a complication for order management.

“There was a considerable recovery that the sovereign titles Dólar Linked and Duales showed in just one week, after a relatively weak September. They achieved negative returns similar to those prior to the PASO“he said in a report Personal Investment Portfolio (PPI) and expanded: “Investors prefer the imperfect currency hedge that these securities offer, rather than not being hedged at all.”

According to a report by MegaQMthe monthly cashflow in pesos for FCI dollar linked shed a volume of $316,363 million subscriptions surpassing all categories, including money markets, which are the favorite instrument of the Argentine market. “Last week he recovered demand is very strong and bonuses like TV24which adjusts to the official dollar and matures in April 2024, went from accruing effective rates of +3%/4% to negative returns of around 30%“, the same administrator explained in a report.

As he was able to find out Ambit, There are five FCIs that are not taking subscriptions but are taking ransoms. At the same time, managers of three leading banks reported that they are operating normally.

“Indeed they had a lot of subscriptions in the last time and some stopped taking them, because the reality is that there are not many instruments to invest“he confirmed to this medium Leonardo Svirskymarket operator, and expanded: “There are few issues, and the papers that are listed on the market today have very negative returns, which means that strong devaluations are expected in the future“.

For its part, Joel Lupierian analyst at the consulting firm Epyca, told Ambit: “By all accounts, it seems real that they are limiting the subscription of dollar linked funds. The appetite for this type of asset is putting upward pressure on the price, making it difficult for funds to both purchase and manage orders.. As the price of dollar linked assets rises, the negative return increases, forcing the funds to buy at parities that a priori would be recorded as losses”.

“This dissociation between the DL and CER curves makes the assets TV24 and TX24 price a devaluation real 40% by March 2024, since the IRR of TV24 is at DL-28% against TX24 that operates at CER+12%. Thus dollar linked assets compressed to levels similar to the previous week of the PASO“said a report last week from Invest in the Stock Market (IEB).

The search for coverage with instruments in pesos tied to the dollar has to do with lSpeculation of a strong devaluation of the official exchange rate, which is currently anchored at $350, after the presidential elections that will be held next Sunday. An example of this is that, in the Matba-Rofex future dollar market, the dollar is agreed this day in $890 for December, $1,093 in January, and $1,269 for February.