Opportunities in times of crisis [Opinión]

Gonzalo García Arboccó, Commercial Director of MFX Prime

The record inflation figures of USA have generated the need to implement corrective measures by the Fed, with the rise in interest rates being the one with the greatest impact. As a consequence of this, the cost of credits increased, reducing the growth of the global economy.

The Peruvian economy is no stranger to its effects. This decrease in growth affected the price of copper, directly influencing our economy. Lower price of the commodity means less flow of capital to Peru in exports. This added to the political instability that pushes the Peruvian investor to seek investment alternatives in developed countries, reducing the supply of dollars at the national level.

This is why we see a rising exchange rate that will not stop in the short term and that we forecast will reach levels of S/.4.20 according to our technical analysis, continuing the recommendation to save in dollars.

These macroeconomic data are key when it comes to investing. At the moment, our investments are concentrated in dollars and in the US, ensuring profits not only due to the exchange rate, but also aimed at surpassing inflation. Thus, we expect a return greater than the expected profitability with products in soles. Although the US maintains a worrying inflation that presages a potential recession, we identify opportunities to take advantage of in the midst of a possible crisis before the end of the year.

For example:

1. Commodities “Super Cycle”

Gold is coming off a 22% correction from its 2020 highs of $2,071. We believe the prices we are currently seeing have already priced in sharp rate hikes and should de-correlated, as the first store of value haven that it was, from the bearish trend of the American market. In addition, the geopolitical pressures between Russia-Ukraine and China-Taiwan should help this long-awaited decorrelation. If history repeats itself, we could see a bullish commodity market for the next decade. That is why we find a strong opportunity in the gold metal. Our specific recommendation goes to assets that accompany the rise in gold, projected to exceed $2,500 per ounce in 2023. For example: ETF GDX, NUGT or shares of major mining companies such as Barrick Gold Corporation.

2. Funds that have sold the most important indices of the American market, taking advantage of the downward trend and that have an upside to be profitable of up to 20% as a result of the fall in the stock market, to later buy several sectors at discounted prices with a view to next “bull run” of the next 6+ years.

Both opportunities have a low-moderate risk and a lot of potential to grow in the following years. These investments take advantage of the situation, and are in dollars, with the capital protected in the US, key pillars today when evaluating an investment.