Omicron variant brings risk to already uncertain scenario
The new Covid-19 variant, omicron, has again turned on the risk mode in the financial markets. In the last month of the year, amid potential cash inflow thanks to the 13th salary, a mandatory year-end bonus for formally employed workers, the investor is faced with this additional uncertainty, while other sources of concern, such as inflationary pressures, have not yet vanished.Patience is the name of the game now, since positions in fixed income (fixed-rate and inflation-linked bonds) and stocks as a whole face losses so far this year. Some analysts see gains ahead, but investors must lower anxiety to get through short-term swings. Tax-exempt bonds are the main recommendation.In November, the Ibovespa lost 1.53%, and is already down 14,37% in the year. In 2021, all the stock market indexes are in the negative territory.The month was one of recovery for fixed-income indicators. IRF-M, which represents a basket of fixed-rate government bonds, is up 1.79%, while IMA-B, which reflects the average of inflation-linked securities, rose 3.47%. In the year, they still lose, respectively, 3.81% and 1.49%. Gross income of certificates of bank deposit (CDBs) was 5,17%, data compiled by Valor Data show. That means CDBs underperformed the 12-month IPCA, Brazil’s official inflation index, which exceeded 10.6% in October.In the year, not even the higher foreign exchange rate, of 8.68%, compensates for inflation. In this respect, only bitcoin, one of the world’s main cryptocurrencies, which is up 108,63%, saw gains.Although the omicron variant adds an extra risk this year-end for the financial markets, the situation is more comfortable now than at the beginning of the pandemic, because Brazilians see again fixed-income options as an escape valve, said Lucas Radd, head of portfolios and advisory at Banco Inter.With the Selic, Brazil’s benchmark interest rate, and IPCA on the rise, he said there are very attractive premiums, both in government and corporate debt, with double-digit nominal yields and assets paying the inflation plus 6% or 7% a year, depending on the risk level.It is an alternative that attracts both conservative investors - because there is apparently "fat" embedded in prices because of fiscal and political risks - and the bolder ones, who usually go for high-yield securities.In Mr. Radd’s view, it’s worth picking tax-exempt securities, such as real estate and agribusiness receivables certificate (CRI and CRA), infrastructure bonds or funds...
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