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Investment options in the face of electoral uncertainty

Until October, accumulated inflation, according to INDEC, was 41.8%. Far seems to be the mark of 29% set by official sources for all of 2021.

Added to the failure to forecast inflationary expectations is the great uncertainty that was encouraged – at least in part – by the Legislative Elections. The whole country is waiting for their results, the Argentines will have to face the polls again this November 14,

We can think that this is a good time to measure social humor in democracy. The results will give a reason to speak about the coexistence of the Powers and regarding the electoral strategies towards 2023.

The reality is that, with a highly polarized and pandemic society, today, it is difficult to think of a near future with a slowdown in the rise in the price level.

The Argentine economy has been sick for a long time. The policies of price control, freezing of rates, the exchange gap and the delay in the official exchange rate do not collaborate when it comes to calming inflation and devaluation expectations. So they could, at some point, accelerate mistrust in the system.

Faced with the continuous change in the rules of the game in the political and economic sphere, the saver must make decisions in order to generate positive real returns on his capital, having, as a starting point, the maintenance of his purchasing power.

At the time of to invest, It is important to study a number of variables before making the decision. You should first think about the term, the time horizon, in which you want to see the results of the investment. It is also key to investigate the different investments possible, depending on the profile of the interested party and their future expectations. In the stock market there are numerous options available which are explained below. Remember to always check with your trusted financial advisor, don’t skydive.

Investment options

Dollar MEP

Also known as “dollar bag”, it is a savings option that consists of buying a bond in pesos followed by its sale in USD. The exchange rate obtained is relatively competitive compared to other alternatives on the market.

Faced with an incredible rise in popularity in recent times, a series of restrictions were imposed on obtaining it in local legislation, so currently only an approximate of USD17,800 can be purchased weekly. Even so, they are still a good way out to dollarize when USD200 per month, at the official exchange rate, does not seem to be enough.

Dollar linked or dollar linked assets

They are financial instruments whose performance is linked to the evolution of the official dollar price, while their commercialization is pesified.

They are a good alternative to “dollarize” at the official exchange rate and protect themselves from a possible devaluation.

These types of assets can be found in Common Investment Funds (FCI), Bonds and Negotiable Obligations.

Bonds or FCI in pesos adjusted by the Reference Stabilization Coefficient (CER)

They are assets that adjust according to the INDEC Consumer Price Index (CPI), they are usually useful to avoid a loss of purchasing power and to fight against inflation. These adjustments will fulfill their function successfully as long as the CPI correctly reflects the variation in prices.

Argentine Deposit Certificates

The so-called CEDEARs are an alternative with volatility, that is, with more risk than the previous options, but independent of the fluctuations generated in Argentina. They can be purchased in pesos or in dollars and their price is linked to the underlying share (and its country of origin) and to the evolution of the dollar counted with settlement.

CEDEARs are a good option to escape the intrinsic Argentine risk by betting on companies that are mostly foreign.

The biggest secret to being successful when investing in the capital market is knowing how to diversify your portfolios. If this is done intelligently, after studying the options and fluctuations, it will be possible to minimize risk and maximize the chances of taking advantage of market opportunities.

The uncertainty does not cease after the Mid-Term Elections and it is essential to find out about the series of available options that generate good yields in pesos. You can still bet on the financial market trying to protect your savings from inflation, devaluation and fluctuations in the local economy.

Source From: Ambito

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