In its monthly letter released this Thursday (9), the Green Asset, by manager Luis Stuhlberger, states that the local scenario continues with “very high doses of uncertainty” and that the government “stimulates the flames of an institutional crisis” that leads to the erosion of the pillars of fiscal balance.
The manager highlights that the country is going through the worst year of rain in the historical series and frosts. “With this background, the market continues to increase the risk premium required in asset prices – this is an elegant way of saying that the prices of all Brazilian assets have fallen”, states the text.
The perception that the government is less and less committed to complying with the spending ceiling, the impasse on the Union budget for 2022 and the political turmoil made the Brazilian stock market have another drop in August, assesses Verde.
The letter also states that there is a dilemma at the moment: whether the fund increases optimistic positions or reduces risk in the face of uncertainties, especially in the pre-election period.
“For now, our answer has been: there is enough premium in the stock market and in the middle part of the real yield curve to maintain our current positions and gradually increase the portfolio’s risk. In other words, the market is cheaper, but not stupidly cheap (whether it will reach this level is perhaps the most relevant question)”, says the manager, noting that the local stock market is supported by the economic reopening as the vaccination advances. In Asset’s view, there are good prospects for profits, at least in the short term.
The Green fund made gains on interest positions taken in developed markets. The month’s losses came from positions in Brazil, particularly in equities, but also in real interest and currency.
In August, Stuhlberger’s multimarket fund (Green FIC FIM) rose 0.33% (against 0.42% of the CDI), recovering part of the losses of July, when it closed down 2.16%. In the year, the gain is 1.62%, below the CDI, which is 2.06%.