Faced with the imminent stagflation that Milei anticipated: what should be invested in?

The president-elect, Javier Milei, will take command from Alberto Fernández this weekend and has already anticipated that The first months of your management will be very complex. In fact, he expects a process of stagflation to occur, which is the combination of stagnation economic with inflation. And, in that context, financial analysts outline which are the best financial instruments to hedge in that economic scenario.

As stated, stagflation combines a stoppage in economic activity with a dynamic of rising prices. Both elements have a negative impact on people’s income and it is more necessary than ever. protect savings and income from this dynamic.

At once, the first stage of the Milei era It will be marked, according to forecasts, by a rise in the price of the dollar. That is another variable to take into account and that also affects inflation. What do analysts recommend as coverage in this scenario?

Investments for conservatives and risk takers

Ezequiel Estrada, Director of Poncho Capitalpoints to Ambit that, for a conservative profile, the most recommended is a Common Investment Fund (FCI) that adjust for the official exchange rate or others that adjust for inflation.

“These last adjusted by CER or UVA and they guarantee the saver is covered against the rise in inflation,” says Estada. And, as examples, he mentions the funds AdCap Coverage and AdCap Currencywhich last month yielded 27.43% and 19.65% respectively, both well above inflation.

He also considers that the negotiable obligations (ONs) They are a good alternative for these profiles because they allow you to know the maturities and coupons, although he considers that “we must avoid those with maturities during 2024 and better look for instruments that expire in 2025 or later.”

In the case of riskier profiles and with a longer-term investment horizon, meanwhile, Estrada points out that “the sectors that will have the best performance during 2024 are going to be minerals, agriculture and hydrocarbons”.

And he hopes that the latter is going to star in a total deregulation, as happened in the 1990s, when the level of production was a historical record in the country. In this context, Estrada recommends the actions of YPF (YPFD), Tansportadora de Gas del Sur (TGSU2), and Cedear Vista Oil & Gas (VIST). In turn, he foresees that companies linked to the energy sector They may also perform well, such as Pampa Energía, and Central Puerto.

CER and linked dollar bonds, an interesting option

For Juan José Vázquez, Head of Research at Cohen Argentina, “the first option in a context of stagflation is the bonds that adjust by CER“, but warns that they are all buying these instruments and points out that “that means that they are all trading at high parities.”

He considers the TX26 as interesting instruments, “which is a little longer, but can be an alternative to make a mix also with bonuses.” dollar linked, That are interesting”. And the ratio in which it is expected that the real multilateral exchange rate should rise, considering the parities that the CER bonds have and tied to the dollar, can be an interesting alternative.

Likewise, he points out that sovereign bonds hard dollar short-term, specifically the GD30 or the GD29, are very attractive sovereign instruments to hedge against a context of stagflation.

In a similar vein, he points out Matias Marsicanostock market producer and graduate in Finance, who points out that “some CER bonds, like the T4X4, are yielding inflation minus 15 points and it is a good instrument.”

The Milei era: a context difficult to anticipate

Anticipate, however, that there will be a lot of volatility in the remainder of the month and that “that will require stopping in some asset that comes from the hand of the official exchange rate, that is going to move.” In that sense, he recommends a dollar linked bond, whether corporate or sovereign, and mentions that stocks can also be interesting, especially those tied to favorable conditions, such as exporters. But with regard to the private sector, he warns that “we must see that internal consumption does not suffer much with the recession”.

In short, he comments that “We have to see what happens in the next three months.”” and advises against betting at a fixed rate (fixed term or money market). Analysts agree that everything tied to inflation and the dollar is the most attractive in this context in which, on the other hand, it is very complex to anticipate what will happen.