Investments 2024: what the city recommends with the lowest inflation in four years

The recent inflation data for November, which stood at 2.4% monthly, the lowest since mid-2020, generated notable optimism in the economic sphere. This data, published by the National Institute of Statistics and Censuses (INDEC) last Wednesday, exceeded the expectations of many private consulting firms, which estimated a floor of 2.6% per month, and even upset some economists who anticipated a higher increase. at 3%.

This decrease in inflation reinforces confidence in the market and forces city analysts to recommend instruments in pesos as one of the best investment options at this time. Among the categories that increased the most, “Education”, “Housing, Water, Electricity and Gas”, “Alcoholic Beverages and Tobacco” stand out with increases of 5.1%, 4.5% and 4.0% respectively.

On the other hand, the core inflation (less volatile prices of the economy) slowed down compared to October, standing at 2.7%. If this dynamic continues, it is a good sign for the inflationary dynamics of the subsequent months.

What instruments does the city look at?

Melina Di Napoli, Wealth Management Product Analyst at Balanz Capitalrecommends investment alternatives in pesos that provide positive real returns, that is, above 2.4% monthly. An example of this are the Capitalizable Treasury Billss (LECAPS) with a Monthly Effective Rate (TEM) around 2.5-2.8% monthly, “depending on the maturity chosen,” he indicates.

“As a second alternative, we find it interesting Balanz Performance II Fundwhich maintains 70% exposure to Lecaps with a term of less than 90 days, has a minimum investment amount of $1,000 and without subscription or redemption fees”, adds Di Napoli.

For his part, Maximiliano Donzelli, head of investment strategies at a renowned broker in the city, indicates that positioning in Lecaps and CER (inflation-adjustable) assets represents the best option to protect value against inflation considering fixed-income assets. low risk and in the face of a possible change in exchange rate policy in the medium term.

Donzelli’s strategy is based on the fact that expectations of normalization of the general price level are also reflected in the inflation rates that the market expects to materialize in the coming months. These are the well-known break-even inflation rates, where the yield obtained by a fixed rate bond and an adjustable bond by CER are equal. These expectations are based on an average inflation of 2.3% between December and February, slowing down in the margin for the first half of the following year.

The assets that the market likes

Donzelli slides some alternatives that he believes can be useful to boost savings, while allowing capital to be protected against rising prices in the Argentine economy.

Boncer T2X5 (Short Term)

• This CER-adjustable bonus expires on February 14. It offers CER+5.5% annually, ideal for protecting capital and overcoming inflation. Its projected return is 3.2% effective monthly. “Option designed for a short-term carry trade, and at the same time, obtaining a return above inflation,” he indicates.

Medium Term

• Lecap May 2025 S30Y5 (Medium Term)

The Treasury bill due May 2025 is ideal for short-term carry trade. It offers an effective monthly rate of 3.0%, aligned with or slightly above projected inflation. If inflation slows, it guarantees an attractive return above it.

Boncer TZX26 (Long Term)

It is a zero-coupon bond maturing in June 2026 that adjusts its capital for inflation through the CER coefficient and amortizes in full at maturity. Thinking of a more aggressive profile, the TZX26 could provide a higher capital gain. It yields CER+8.6% annually and has a duration of 1.42 years.

Inflation in the future: what you need to know

“Beyond the concern expressed about the contraction in the level of activity, as an additional challenge in the search for fiscal balance, for the moment the government remains firm in its intention to lower inflation,” analyzes Donzelli.

The strategist remembers that the BCRA recently lowered the monetary policy rate. “This measure responds to some symptoms of illiquidity in the system, added to the lower nominal rate of the economy and downward inflation expectations,” he says. This last point also raises uncertainty about the dynamics that the crawling-peg will follow. In the event that the Government decides to reduce the rate of devaluation, andThis measure would function as a reinforcement of the anti-inflationary program.

Expectations of normalization of the general price level are also reflected in the inflation rates that the market expects to materialize in the coming months. These are the well-known break-even inflation rates, where the yield obtained by a fixed rate bond and an adjustable bond by CER are equal. These expectations are based on an average inflation of 2.3% between December and February, slowing down in the margin for the first half of the following year.