Nobilis presented its annual market report “Perspectives 2022”, which analyzes the performance of the national and international market during the last 12 months and includes projections for this year.
Regarding the performance of the local market, Nobilis points out in its report that Uruguayan bonds in dollars ended the year with a total negative return that reached an average of 1.7%.
However, when comparing this result with what happened with other emerging country bonds, it can be seen that Uruguay’s performance was better than that of the Latin American region, where they fell by around 3.3% on average.
On the other hand, Uruguay’s country risk, which somewhat captures credit quality, remained relatively stable and even fell slightly in 2021.
The firm made a “moderately optimistic” forecast, similar to that made for 2021, since it foresees a 3.3% increase in economic activity for the current year, according to the estimates made in the Bank’s economic expectations survey. Central Bank (BCU), considering that the good performance of the last half of 2021 is likely to allow these projections to be corrected upwards.
Meanwhile, a good tourist season “would have a positive impact on service export figures, which would add to the good performance of this variable in 2021, with which it would remain an engine for economic activity.”
External demand “also promises to remain firm as the global economy continues to show vigorous growth for 2022 and that also allows us to forecast strength in the price of the commodities that Uruguay exports.”
Nobilis warns in his balance that “there are several sources of uncertainty that must be considered when making projections, such as the referendum for the repeal of 135 articles of the Urgent Consideration Law (LUC) and the results of the presidential elections in Brazil.
On the other hand, the investment team highlighted one of the most important milestones of this year, which was the decision to submit the quality of the investment management of the investment fund “Growth Strategy” to the analysis of the rating agency Fix Ratings. The agency gave it an A+c (uy) rating, making it the first fund in Uruguay to have an independent rating.
Regarding the financial markets, the report addresses the situation at the international level, highlighting 2021 as the year of vaccination and global reopening.
While the immunization campaigns were taking place and the effectiveness of the vaccines was being observed, the measures restricting mobility were lifted and with this the global economic activity was reactivated, which closed the year with a growth of 5.5%.
In this scenario, central banks maintained their expansive policies and governments continued to provide fiscal support, particularly that directed at households, which led to global demand being restored faster than supply and pushing inflation up around the world to levels not seen in decades.
The market reflected this reality by raising rates, causing most bonds to close the year in negative territory. However, the strong recovery in activity led corporate profits to beat analysts’ forecasts and propelled global stocks to new all-time highs, closing for the second year in a row with double-digit returns.
For this year, the level of global activity is expected to continue growing, although at a slower rate than in 2021. According to World Bank estimates, global growth in 2022 will be 4.1% (3.8% developed countries and 4.6% emerging) and then the pace will continue to moderate towards the long-term potential.
Emerging countries are the ones that are furthest behind in terms of recovering the level of activity prior to the pandemic and only approximately half of them will achieve it in 2022.