Turbulent, challenging, difficult. There is no shortage of adjectives to classify the year 2022 when it comes to the financial market. After all, several events complicated the lives of investors over the months and directly impacted the profitability of several applications.
To begin with, the war between Russia and Ukraine has affected the market for commodities such as oil and grain. In addition, the zero Covid policy in China and inflation in the United States, which made interest rates rise there, also contributed to the negative scenario in Brazil.
Around here we still saw an escalation of inflation and the increase in the basic interest rate, the Selic. In view of all this, it was conservative investments, such as fixed income, that presented the best performances.
Of course, past profitability does not guarantee future returns, but understanding what happened in 2022 can be important to plan investments for 2023, as some of the main global economic events continue to happen.
So, see below the investments that yielded the most in 2022 and those that didn’t do so well.
How much was the return on fixed income investments?
Used by the Central Bank to control inflation, the basic Selic interest rate started 2022 at 9.25% and went through five consecutive increases before stabilizing and ending the year at 13.75%.
This placed the Selic Treasury as the most profitable investment of 2022. Other more conservative investments, such as CDBs that pay 100% of the CDI, also had significant returns.
Check below the performance of the main fixed income investments in the year 2022.
| Investment | Performance |
| Treasury Selic 2027 | +13,11% |
| Treasury Selic 2025 | +12,90% |
| Treasury Selic 2024 | +12,71% |
| Treasury Selic 2023 | +12,53% |
| CDB 100% do CDI | +12,37% |
| IPCA Treasury 2024 | +10,40% |
| Savings | +7,9% |
Why did this happen?
In general, when Selic rises, other interest rates also increase, such as loans, overdraft, credit card, financing and also some investments, mainly fixed income ones.
In the case of the Selic Treasury and savings, the more the Selic rises, the more they yield. And in the latter case, the yield follows the following rule:
- If the Selic rate is equal to or below 8.5% per year, the savings account yields 70% of the Selic rate + the reference rate;
- Now, if the interest rate is above 8.5% per year, the savings account yields 0.5% per month on the amount deposited + TR.
The yield of CDBs (Bank Deposit Certificates) that accompany the CDI also rises with the rise in interest rates. This happens because the CDI closely monitors the evolution of the Selic rate. Therefore, when interest rates rise, the CDBs that pay the CDI also yield more.
How much was the return on variable income investments?
On the Stock Exchange, the result was much more modest. The bad international scenario directly affected the Brazilian market. The Ibovespa, the main index on the B3, engaged in a sequence of declines amid a sharp rise in interest rates.
“When inflation finally started to subside, elections came and, with it, fiscal risk. This cooled the advance of the main index of our Stock Exchange, closing the last two months of the year in a fall. If it weren’t for a substantial increase of 6.53% in the penultimate week of the year, the Ibovespa would have ended the year in the negative, but, given that, it ended up 4.69%”, explains Ângela Tosatto, investment analyst at NuInvest.
In the case of other variable income assets, the result was even worse, with negative numbers. See below.
| Investment | Performance |
| Ibovespa | +4.69% |
| Dollar | -5.3% |
| Bitcoin | -66.5% |
What happened to the dollar?
The dollar devalued 5.3% against the real in 2022. And the reason, once again, was the high interest rate here in Brazil. The higher interest rates attracted foreign investors, who invested both in the Stock Exchange and in government bonds.
This foreign flow brings more dollars to the Brazilian market and, as a result, the US currency becomes “cheaper”. In other words, it depreciates against the real.
“A high interest rate makes the real attractive for use in ‘carry trade’ strategies, which consist of borrowing in countries with low borrowing costs and investing these resources in a more profitable market. A good part of the US currency’s losses against the real came in the first quarter of last year, when the US currency fell 14.55% against the real. It was the biggest quarterly percentage drop since the second quarter of 2009, where it fell 15.81%”, details Ângela Tosatto.
E o Bitcoin?
In 2022, cryptocurrencies faced their first major crisis. The so-called winter of digital currencies, that is, the fall in prices of this type of asset, has arrived and left many investors insecure. Only bitcoin, the main digital currency in this market, fell 66.5% from January to December, and influenced other currencies.
The increase in interest rates in the United States and the expectation of a possible global recession influenced the fall of bitcoin and the entire crypto market. That is, no one escapes the not-so-good numbers of the global economy.
What is the expectation for 2023?
The financial market fears that, in 2023, the global economy will face a recession. According to investment analyst Ângela Tosatto, a lower growth in the world economy could affect economic activity in Brazil, but on the other hand it could bring a relief in inflation by accentuating the fall in commodity prices.
And, if commodities fall more than expected by the market, the Central Bank of Brazil can anticipate the monetary easing cycle, that is, reduce the Selic rate.
“As not everything is flowers, the drop in commodity prices directly impacts the shares of the main index of our Stock Exchange, given that 36% of the composition of the Ibovespa is made up of companies linked to commodities. Therefore, a drop in commodities means that the space for the appreciation of shares is limited”, he says.
But if in 2023 the Selic remains at the current level, instead of falling as experts have been projecting, the scenario could negatively impact the sectors and companies of the Stock Exchange that are more sensitive to interest rates. In this group are retail, airline, education and health companies. In other words, they are the ones that suffer the most from a reduction in the income of the population.
Anyway, as you saw in the returns on fixed income investments, high interest rates can mean an opportunity for those who choose these investments.
“With the possibility of an increase in interest rates, or at least maintenance of the Selic at the current level for longer than previously expected, investors have a window of opportunity for good profitability, which should remain high in 2023, in post-fixed bonds and also managing to lock in a relatively high real interest rate for all maturities”, says Eduardo Perez, fixed income analyst at NuInvest.
Enjoy and check out, below, eight facts that messed with your money in 2022.
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