Funds that gain from high interest rates, EU vs Apple and what matters in the market

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Who gains from rising interest rates?

With a strategy connected to the scenario of rising interest rates in the US, hedge funds have generated good returns for their investors in recent months.

What explains: these types of funds mix different assets, such as foreign exchange, equities, derivatives and fixed income.

• Anticipating a tough monetary tightening by the Fed to deal with inflation, they bet on derivative contracts that tend to appreciate in value with every move the US central bank raises rates.

In numbers: in the first quarter of the year, these funds recorded an average return of 6.12%, according to the IHFA (Anbima’s Hedge Funds Index). It was well above the gains of 2.42% of the CDI (which is usually the reference) in the same range.

Dollar remains under pressure: another reflection of the interest rate hike in the US is the US dollar, which rose 2.60% this Monday and closed breaking the R$ 5 barrier, the BRL 5.072. It is the highest value for the currency since March 16.

• In addition to monetary tightening, the period will also be marked by the uncertainties generated by Covid in China and the war in Ukraine, as well as a dose of volatility with the elections here.

this monday, the market operated cautiously in anticipation of the “Super Wednesday”, the day when the Central Bank and the Fed announce their interest rate decisions. Here, the Selic should rise by 1 percentage point, to 12.75% per yearwhile in the US the reference rate should go from 0.5% per year to 1% per year.

Reflecting the climate of tension and also of results that showed a faltering global economic recovery, the Ibovespa fell 1.15%, at 106,638 points. This after having closed April with a fall of 10.1%

Compensation depends on goals and CEO

Nubank once again detailed its voluminous compensation plan planned for the eight directors for the year 2022, which had a lot of repercussions last week.

This time, it informed the market that 84% of the R$ 804 million, or BRL 678.9 millionwill be aimed at fintech CEO and founder David Vélez, as long as he stays with the company for at least five years and achieves a series of goals.

Understand: the digital bank said that this value should practically represent 100% of Vélez’s remuneration over the next five years and the plan was supported by an internationally renowned consultancy.

• Nubank had already stated last week that the amounts would only be paid with the achievement of ambitious goals, such as the one that requires that the average price of class A common stock never fall below $18.69 (R$ 93) for a period of 60 consecutive days.

• The second condition is that the average Class A common share price is equal to or above US$ 35.30 (R$ 177) in this time interval. Nubank debuted on the stock exchange at US$ 9 (R$ 45.23) and today the shares are operating close to the $6 (BRL 30).

remember: you BRL 816 million that Nubank expects to pay executives and board members drew the market’s attention for the increase in values ​​compared to what was spent in 2021 (R$ 185.3 million) and in comparison with other banks.

• Itaú, the largest in Latin America, paid last year BRL 444 million to 45 members of its board of directors and councils.

• The company’s share-based compensation strategy is an instrument used by companies to insure and encourage employees, who are paid according to the performance of their roles.

Shopee wins endorsement to expand services

In yet another move to strengthen its presence in the country, SHPP Brasil, owned by the Asian online retail giant Shopee, received approval from the Central Bank to operate as a payment institution.

Understand: the modality will be the issuer of electronic money, whose function is to manage a prepaid payment account (with funds deposited in advance).

why it matters: Shopee advances in an area already explored by other giant retailers operating in the country, such as Mercado Livre, Magazine Luiza, Via (Casas Bahia and Ponto Frio) and Americanas.

• The companies’ idea is to expand the offer of financial services they offer to consumers and sellers who work on their platforms, generating new sources of revenue for the company.

• As a payment institution, Shopee is not allowed to offer credit, an alternative offered by domestic retail rivals.

Shopee says she is Brazilian: with 2 million national retailers, the Singaporean giant has been struggling to get rid of the Asian seller label, and for that it presents robust numbers.

• Says 87% of its sales are made by Brazilian sellers, while the remaining 13% are imported.

• It was the most downloaded shopping app in the country last year, with more than 100 millions of downloads, according to data from EmizenTech.

• The offensive comes at a time when the Federal Revenue Service is preparing an MP (provisional measure) to prevent foreign companies from selling goods to Brazilians without paying the due taxes.

EU x Apple

The EU (European Union) accuses Apple of restricting rivals’ access to contactless payment technology on its devices, favoring only the Apple Pay system.

The practice would be a violation of the bloc’s competition law, investigators said.

Understand: The EU said it has indications that Apple does not release access to NFC technology for iOS so that mobile wallet developers can create solutions rivaling Apple Pay. The company may be fined up to 10% of your global turnover.

• The world’s most valuable company says Apple Pay is one of many options available to European consumers to make payments and that it has ensured equal access to NFC while setting standards for privacy and security.

why it matters: this is another episode of the duel between the EU and the big techs, in a fight that should pay off a lot ahead. Recently, the members of the bloc reached an agreement that paves the way for broad regulation of the activity of large technology companies.

• The new rules are scheduled to take effect in January 2023 and have been classified as historic by the European Parliament.

It’s not just Apple: Google filed an appeal this Monday to get rid of paying a fine of 1.49 billion euros (R$8.4 billion) imposed by the EU in 2019.

• The company was accused of undermining rivals in its search engine. The case is one of three that resulted in a total of 8.25 billion of euros (R$ 43.62 billion) in EU antitrust fines against the company.