The Brazilian investor lost money on this year’s finance seesaw, with the stock market and interest rates alternating in a sharp rise and fall amidst the soaring inflation.
In the inflationary context that contradicted specialists’ forecasts, bitcoin occupied with great advantage the position of best investment of 2021 in the country, according to a survey by Economatica’s institutional relationship manager, Einar Rivero, who considered a basket with previews of 16 reference indicators computed until this Thursday (30) or its most recent closing.
The cryptocurrency accumulated a gain of 75.83% in 12 months. It should be noted, however, that it has been falling in recent months and its future in 2022 is also uncertain.
Investments abroad through BDRs (Brazilian Depositary Receipts) and ETFs (funds that track foreign indices) also achieved real gains. BDRX, a kind of virtual portfolio to measure the performance of these assets offered by B3, the Brazilian Stock Exchange, accelerated 33.65%.
The Ibovespa, the country’s stock market reference, fell by 11.93%. It is the worst result of the comparison.
Indices that measure the rise in the cost of living filled the five positions subsequent to bitcoin and assets abroad in the ranking, with the IGP-M (General Price Index – Market) being the one that rose the most. The reference indicator for readjustments in rental contracts jumped 17.78% in the year.
All traditional investments included in the survey lagged behind inflation. The official indicator rose 9.26%, according to the IPCA (Extended Consumer Price Index) accumulated until November.
Inherent in risky investments, volatility was heightened by low interest rates for most of the year and an unexpected and persistent spike in inflation. This combination is pointed out by analysts as the villain of portfolios.
“Investments in fixed interest, post-fixed, stock exchange, that is, the more traditional ones had a negative real return”, says Evandro Buccini, partner and director of fixed income and multimarket at Rio Bravo.
The savings account yielded 2.99%. The most popular investment in the country was slightly behind the CDI (Certificates of Interbank Deposits), which rose 4.35%. This index is the basis for interest-linked CDB securities and is generally recommended for the composition of a reserve fund due to its daily liquidity.
Dollar and gold are safe havens in times of volatility. But only the American currency proved to be an interesting asset to protect wealth in 2021. The currency appreciated by 7.39%, according to the reference exchange rate calculated by the Central Bank, while the metal gained only 4.43%.
Investors or not, Brazilians lost. That’s what this year’s finance photo shows. It reveals a scenario in which companies had devaluation, while interest rates had to be accelerated by the Central Bank in an attempt to contain inflation.
Even more worrying, according to Buccini, is the realization that the domestic stock market is often at a disadvantage compared to interest rates.
“It is difficult to make large generalizations of the return of just one year. But, even looking at returns through larger windows, the Ibovespa loses to the CDI. This is a paradox and shows that the country’s growth has been lacking for decades,” he says.
The resurgence of the pandemic at the beginning of the year is the main cause for the financial picture of 2021, as it disrupted global supply chains, causing shortages and high prices around the world.
Domestic policy factors, however, contributed to making Brazil look worse in the picture. US stocks broke successive records throughout 2021 with the impetus of a stimulus package from the US government. A similar movement took place in Europe. Several markets benefited from the injection of liquidity, while the Brazilian lost his ride.
The coup-rooted demonstrations led by President Jair Bolsonaro, in September, and the uncertainties generated by the government’s decision to breach the spending ceiling were relevant to complete the damage caused by the pandemic, said Gustavo Franco, former president of the Central Bank and adviser of Rio Bravo, in its economic review at the end of the year.
Real estate funds were also among the worst returns of the year. The index that tracks these assets gave 2.28%.
The seesaw of interest explains, once again, the negative result, according to Camila Almeida, partner and founder of Habitat Capital Partners.
“We come from a time when the basic interest rate reached a historic low of 2% a year, which made many investors look for other investment options as an alternative to fixed income, among them, real estate funds. a higher Selic [no segundo semestre], investors opted to return to fixed income,” he commented.
Almeida emphasizes that these funds have other attractions, such as the distribution of monthly income exempt from Income Tax and access to investment in the real estate market with a low entry barrier.
For 2022, however, she assesses that CRIs, securities backed by real estate credits, will navigate better than funds because they have yields indexed to inflation or the CDI.
Evandro Buccini of Rio Bravo says the main lesson of 2021 is the importance of a direct defense against unexpected high inflation. The best instruments for this, according to him, are the NTN-Bs (Series B National Treasury Notes), which are Treasury Direct bonds with yields linked to official inflation (IPCA) plus a fixed interest rate.
In the troubled 2021 scenario, however, the performance of the index that makes a general overview of this type of investment was also in the red.
“There will always be something unexpected. The important thing is that portfolios are prepared for volatility,” he says.
Cryptoactive triggers on the basis of advertising and the search for profitability
The turmoil in traditional investments generated by the pandemic paved the way for the growth of bitcoin, the main representative of cryptoactives, amidst the search for profitability. But it was not just that.
The popularization of NTFs (English acronym for non-fungible tokens) and the adoption of bitcoin as the official currency of El Salvador gave great publicity and boosted the demand for this and other assets created from encrypted codes, according to Rodrigo Soeiro, founder of Monnos Cryptobank.
On September 7, El Salvador became the first country in the world to officially adopt the cryptocurrency.
Insignificant for the global economy and the size of the state of Sergipe, the country of paradise beaches in Central America attracted the attention of the world press with this decision.
Despite popular protests against the adoption of cryptocurrency, the country’s president, Nayib Bukele, announced in November the creation of a city dedicated to bitcoin mining. The large energy demand required for this activity would be supplied by thermal generation provided by the Conchagua volcano.
“This all brought a lot of visibility to bitcoin”, comments Soeiro.
NTFs, which use the basis of cryptocurrency technology to certify that a digital article (a photograph, for example) is original, are now being adopted in increasing numbers by major brands, artists and electronic game producers.
“The advent of NFTs is bringing a dynamic of massification”, he says.
Soeiro reinforces, however, that the cryptoactives market is evolving and “is still a wild environment”, in which there are frauds and, therefore, it requires dedication from the investor to obtain information about which serious entrepreneurs offer access to the business.
He estimates that this market will grow even more in 2022, with the popularization of payment methods that use assets protected by lines of code. “There will be more merchants getting paid in cryptocurrencies. This will drag a mass of users into this ecosystem.”
It is not possible to guarantee, however, that these assets will continue to rise. Like other risky investments, cryptocurrencies are being affected by expectations of higher global interest rates due to monetary tightening announced by major central banks. Bitcoin retreated 17% in December alone.
Stock drops 11.9% in 2021 and closes in the red after five years on the rise
The main index of the Brazilian Stock Exchange closed on a high this Thursday (30), in the last session of 2021. With that, the Ibovespa ended the year with a drop of 11.93%, the first drop after five annual highs.
In the session, the index rose 0.69%, to 104,822 points. In December, the Ibovespa had a gain of 2.85%, interrupting five months of declines.
The commercial spot dollar closed the last trading session of 2021 down 2.07%, to BRL 5.5760 on sale, its steepest daily loss since the end of August.
Despite the losses this session, the US currency posted a gain of 7.45% in 12 months, its fifth consecutive year of appreciation.
Wall Street closed lower on Thursday on a day of narrow end-of-year trading volume.
The Dow Jones lost 0.25% in the session but gained 18.92% in 12 months. The S&P 500 retreated 0.30% on the day. In the year, it jumped 27.23%. Nasdaq yielded 0.16% in the trading session, while it advanced 22.14% in 2022.
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