The banks are energizing the market, not only are they showing an exuberant rise in the stock market, The improvement in dollar deposits shows us that there is more confidence in the economy, and the banks are encouraged to lend those dollars.
Total dollar deposits as of December 7, 2023 stood at US$16,479 million, of which US$14,126 million are deposits from the private sector. We have the latest data available as of April 26 and total deposits amount to US$19,200 million, of which US$17,209 million are deposits from the private sector. Under the Government of Javier Milei, private deposits grow by US$3,083 million, which reflects an increase of 21.8%.
The economy at the pace of a dollar (almost) still
Loans in dollars to the private sector amounted to US$3,616 million as of December 7, 2023, and as of April 26 they amounted to US$5,748 million, reflecting an increase of 59%.
These figures only show a change in the climate in the markets. There are more deposits and loans in dollars, which speaks of a more relaxed financial systemand less pending any macroeconomic news that complicates the economic scenario.
The Government has established an exchange and monetary policy where the exchange rate will not show changes, will continue its update of 2.2% monthlyand although by June the export dollar (80% wholesale dollar and 20% CCL dollar) could no longer be in force, we would be working with the IMF to request an extension of it.
Currently, The field is not liquidating the harvest as the market expected. Of the total soybeans expected to be harvested, only 8.0% has been sold with a price, while the remaining 92% has no price. In corn, only 20% of the harvest has been sold with a price, and 80% has no price. In wheat, 50% of what was harvested has been sold at a price. Obviously at these prices, with these retentions, and with no profitability in sight, the field is playing by waiting before liquidating, with low rates many are gambling on financing themselves in the market and retaining inventory (it seems that the Government did not take this into account ).
The fixed-term rate is increasingly lower and sovereign bonds in dollars appear to be a good investment option.
The reserves on May 28 are located at US$28,374 million, we do not know if the Central Bank is going to renew the loan that China made to the country the previous year, the agreement with the IMF is far away, and the US$15 The expected billions of financing have not yet arrived. Will they arrive?
The Government deployed a high-impact policy in economic matters, both macro and micro. The fiscal surplus and the peso restriction caused the economy to enter a harsh economic recession. The new management carries out a policy of adjusting the exchange rate by 2.2% monthly. This is an anchor that does not make Argentine production competitive with the world, it delays the arrival of investment (without investment there is no reactivation), and if we do not have an improvement in activity we will not immediately see a reduction in taxes or exit from the stocks. exchange.
Bonds adjusted by CER are emerging as a good investment
The bonds in pesos adjusted by CER have modified their curve, the fixed-term interest rate fell to 40%, and The expectation that 12-month inflation could be around 59% annually would leave the fixed-term rate with a negative rate of 7%.
CER bonds have rearranged their performance and in many cases have begun to show positive rateswhat they do competitive versus UVA fixed deadlineswith the difference that these are short-term, and The bonds are for higher terms.
It would give the impression that the market has a additional price rally, either in sovereign bonds in dollars, as well as bonds in pesos adjusted by CER.
The fixed-term rate was no longer attractive; However, for now a massive migration of money from banks towards other fixed or variable income instruments has not been observed.
The Actions They should also look very benefitedsince the biggest enemy of variable income is the interest rate, and the Government deliberately took it to extremely low levels, so low that many companies finance themselves in the market so as not to sell their stocks at low prices.
The game is very long, and only the passage of time will tell us how the economy evolves. As a matter of fact, tax collection in April was 13% lower than inflation in real terms.
Banks anticipate a more stable economy and began to offer mortgage loans and loans in dollars.
How do you see the scene?economic nary the markets
In the last rounds, the market began to discount that the Government will be successful in its anti-inflationary policy. Statements from members of the economic team predict an inflation of 8.0% for April, and 5.5% for May, However, this would be achieved because the rate increases for the month of July will be postponed. It would give the impression that the economic team wants to reach an agreement with the IMF in the month of June with more detailed numbers. After the agreement, there could be tweaks.
Economic activity has been falling, but national authorities expect a V-shaped exit from the crisis, when the majority of the market does not see growth drivers for an exit of this type, everything would indicate that low activity is here to stay, at least during the year 2024.
The capital market continues to discount a resounding success of the economic plan, sovereign bonds such as AL30 are listed at US$58.50 and have a return rate of 21% annually, so that we can lower the country risk of 1,000 points these titles should be located around US$70 and its return rate would be 13.5% annually. Cheer up, we can still do it.
Banks have begun to show exceptional increases, Grupo Financiero Galicia was worth US$1.70 on December 7, 2023 and is currently worth US$3.43. Banco Macro was worth US$2.58 on December 7, 2023 and is currently worth US$6. These are two examples of the great expectation that the market has regarding a quick exit from the stocks., lower inflation and more market financing. For now, no one is talking about possible defaults in the system, despite a scenario of economic recession. Everyone sees the glass half full.
