High Selic benefits paper funds, agreement between Vale and Tesla and what matters in the market

​ANDsta is this Monday’s edition of the FolhaMercado newsletter (9). want to receive it from monday to Friday at 7 am In your email? Sign up below.

High Selic benefits paper funds

The current cycle of high interest rates, the strongest in Brazil since the creation of the inflation targeting system in 1999, makes the opportunities offered by fixed-income securities even more attractive.

It is possible to gain from this strategy not only in the public and private bond market, but also with paper funds, traded on the stock exchange.

Understand: these FIIs (real estate investment funds) invest in CRIs (Receivables Real Estate Certificates), fixed income private securities linked to the real estate market.

• The rise in interest rates benefits these assets because they tend to fluctuate according to inflation, measured by the IPCA, or the CDI (average index of short-term loan contracts negotiated exclusively between banking institutions).

Against the tide: despite the increase in the Selic rate affecting the FIIs industry as a whole, the price of shares in paper funds is an exception to the drop observed in other types of FIIs at these times.

More on interest rate hikes and investments:

• The Selic rate is high, but bonds linked to it should still lose the IPCA+5%, says Michael Viriato, from the blog De Grão em Grão.

• The perception that the American monetary policy will be more contractionary explains the devaluation of currencies against the dollar in the last three weeks, points out columnist Samuel Pessôa.

Vale will supply nickel to Tesla

Vale announced on Friday (6) that it has signed a long-term agreement with Tesla to supply low-carbon nickel from its operations in Canada.

The strategies: on Vale’s side, the deal makes sense for business diversification, increasing its exposure to the electric vehicle industry, and also contributes to the company’s ESG agenda.

• For Tesla, the agreement means greater guarantee of supply of one of the most essential components for electric cars. Nickel is used in the battery of these vehicles.

why it matters: the metal market has been turned upside down by the war in Ukraine, as Russia is home to the world’s largest nickel producer.

• The impact came to prices. While nickel has not fluctuated much beyond US$10,000 and US$15,000 a tonne over the past five years, on March 8 its price soared to US$100,000 a tonne on the London Metal Exchange, which froze negotiations at the time.

• Despite not being at that level anymore, nickel prices are still under pressure and are being negotiated around US$ 30 thousand.

Musk turns to friends

While Elon Musk can’t convince most big funds to crack his Twitter account, he’s turning to his billionaire friends — and who’ve already made a lot of money from him.

On Thursday, the billionaire said he managed to raise $7.14 billion (R$ 35.7 billion) with 19 investors. Among them are Larry Ellison, co-founder of Oracle and a member of the Tesla board, and the president of crypto platform Binance, Changpeng Zhao.

The funds declined to support Musk’s offensive over the few details of his plans for Twitter, the Financial Times said. Even the promise of putting the company back on the stock exchange in a few years was not enough.

In numbers: the new money will go towards reducing some of the equity in Tesla shares that Musk has pledged to fund the purchase of the social network. Before at US$ 12.5 billion, now this slice is in US$ 6.25 billion.

• The billionaire still has to pay $21 billion in cash and another $13 billion in bank financing. To raise the cash, he has already sold $8.5 billion worth of Tesla stock.

• In all, Musk will still be hanging with just over $20 billion.

In justice: The South African and Twitter were sued on Friday (6) by a Florida pension fund that seeks to prevent the billionaire from completing the purchase of the social network before 2025.

Teles x big techs

Teles operating in Brazil and big techs like Facebook, Google and Apple are fighting a backstage battle over 5G and Wi-Fi networks in the country.

Understand: the trouble is in a megablock of 6GHz (Gigahertz) frequencies that Anatel has allocated free of charge to companies interested in providing services through the so-called wi-fi6E —technology that enables super wi-fi hotspots.

• According to them, in the future this band will need to be used by 5G, which will cause technical problems because it will be busy.

In numbers: at stake is a market for $112 billion by 2030, which, according to telecoms, could be dominated by technology giants.

What big techs want: the tech giants are keeping an eye on these frequencies because they want to build their own wi-fi networks so that their products work only over this infrastructure.

• A Google augmented reality glasses, for example, would work over Google’s Wi-Fi network.

The telecoms also question Anatel’s decision due to the low number of Wi-Fi6E devices with certification. Currently, there are two dozen of them.

In Europethe EU (European Union) assesses whether big techs should contribute to the financing of telecommunications networks.