Local assets offer an attractive risk-return profile.
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Local Macroeconomic Outlook
GDP is projected to contract by -1% in 2023, with a downside risk.
Confidence indices continue to reflect a pessimistic outlook regarding the future of the economy.
Base-case inflation forecast at the end of 2023: 4.7% year-over-year
The MPR is expected to remain at 11.25% for an extended period. A change in the policy stance could be delayed until late Q2 2023 or early Q3 2023.
Local uncertainty is easing and approaching pre-2019 levels. However, 2023 will continue to be marked by ongoing reform processes.
Domestic Equities
IPSA offers an attractive risk-return profile
One of the few global markets with the potential for multiple expansion. High dividend yield. Potential for CLP appreciation in line with the depreciation of the DXY and rising commodity prices.
IPSA offers a substantial discount compared to its peers and its own historical rates
Attractive dividend yield of 8.5%
Our projections indicate that the IPSA will rise to around 6,500 points in 12 months, which is equivalent to an increase of ~25% from current levels.
Low representation of this asset class in the portfolios of local and international investors
Sectors to overweight: Commodities, Telecommunications, Consumer Goods.
Our Fynsa Total Return investment fund offers a portfolio built on strong conviction, based on the concentration of its positions and its sector exposure; it prioritizes companies with attractive valuations, growth catalysts, and attractive dividends. The fund has consistently outperformed the IPSA and positioned itself competitively against a demanding sample of equity funds, ranking in the top quartile since its inception.
Local Fixed Income
Maintain a position on the short end of the curve. Neutral in terms of UF exposure
Over the past 12 months, the short end of the yield curve has risen sharply, creating an attractive risk/return profile and pushing long-term rates to lower levels.
Overweight corporate issuers with high credit ratings. (AAA; AA)
Corporate spreads are widening slightly, given the increased risks to growth, but remain below pre-pandemic levels.
The more persistent inflation in 2022, coupled with the unanchoring of inflation expectations, led the Central Bank to raise the TPM to 11.25%, a level it maintained at its last RPM and will likely maintain through the first part of 2023, pending more consistent data showing a decline in inflation. According to forward rates (FWDs), inflation is expected to decline in the coming months, falling to 4% by March 2024.
Improved institutional workflow.
Our Fynsa Deuda Chile investment fund offers an attractive risk-return profile, with a YTM of UF+5.1% and a duration of just 1.8 years. Flexible exposure to the UF, currently around 75%. Exposure of approximately 90% to bank bonds, DAP bonds, and Treasury securities, resulting in a favorable liquidity position. A conservative portfolio in terms of credit risk, with an average rating of AA+.
Exchange rate
The decline in the exchange rate is already beginning to outpace economic fundamentals.
The global trend for the dollar has been steadily weakening in recent months, given the outlook for lower inflation and lower interest rates in the U.S. While we acknowledge the progress made on inflation, it is still insufficient to dissuade the Fed from continuing to raise interest rates; therefore, after a 12% decline from its October highs, the scope for further depreciation of the dollar is beginning to narrow.
Domestically, the exchange rate is trading $30 below what we consider to be its fair value in the short term, and real exchange rate levels no longer suggest that the currency is so “undervalued.”
We find the range around $800 attractive for resuming dollar purchases.
