The stock market assets of Argentina renewed the bullish series this Monday, after the Central Bank ordered a new reduction in its reference rate last week and at a time when all eyes are on the treatment of the so-called “Bases Law” in the Senate.
Meanwhile, the BCRA reduced its foreign currency purchasing capacity in the exchange market, where the amount traded was less than USD 200 million, one of the smallest volumes so far this year.
The leading stock index S&P Merval from Buenos Aires rose 3%, to a nominal record closing of 1,495,826 points. The panel has risen 60.9% in pesos since the beginning of the year, still a rate slightly lower than the inflation of the period, while in dollars “counted with settlement” it has advanced 41.3%, once again leading the markets’ gain global.
A marked bullish trend in the main New York stock market indices, in a range of 0.5 to 1.2 percent, contributed to the rise in the local stock market, the sixth consecutive. Among the shares and ADRs of Argentine companies traded in dollars on Wall Street, the Despegar (+8.9%), Banco Supervielle (+8.8%), Banco Francés (+8.4%) and Edenor (+8%).
The BCRA lowered the rate to 50% annually on Thursday, from the previous 60%, due to an improvement in expectations of a decrease in inflation.
“The capital market continues to discount a resounding success of the economic plan, sovereign bonds such as ‘AL30’ are listed at USD 58.50 and have a return rate of 21% annually. For us to lower the country risk of 1,000 points, these securities would have to be around $70 and their return rate would be 13.5% annually,” said the analyst. Salvador Di Stefano.
Bonds in the Electronic Open Market (MAE) improved 0.6% in their average in pesos. On Wall Street, Global securities in dollars gained 0.5% on average, while JP Morgan’s country risk fell 13 units for Argentina, to 1,229 basis points at 5:30 p.m.
“Looking ahead, this week it will be essential to closely follow how the treatment of the ‘Bases Law’ continues. In this sense, tomorrow (Tuesday) the plenary session of committees of the Upper House will be held to discuss this law and the fiscal aspects,” he recalled. Personal Portfolio Investments. “The negotiations will be complicated,” she estimated.
The Chamber of Deputies approved the “Bases Law” promoted by the libertarian president Javier Milei and now it must be discussed in the Chamber of Senators, where the ruling party will need to reach political agreements since it has a minority.
“The half-sanction of the ‘Bases Law’ is a first step to consolidate the macroeconomic improvements achieved so far. If approved by the Senate and become law, it will provide fiscal aid to the Government and provinces, ensuring that the surplus achieved so far is not based largely on transitory factors,” he stated to Reuters Roberto Gerettoanalyst at Fundcorp.
In this framework, the General Confederation of Labor (CGT), the largest labor union in Argentina, called on Thursday the 9th for a general strike against the fiscal adjustment promoted by the ruling party. The strike would be the second mobilization of the CGT since Milei assumed the Presidency.
The amount traded in the cash segment of the exchange market was one of the lowest so far this year, about USD 195.1 million, with a decrease of more than USD 100 million or 34.4% compared to Friday. On the wheel BCRA bought USD 65 million, which raised the absorption of foreign currency to USD 370 million in the first tranche of May.
On the other hand, the international reserves fell by USD 687 millionto USD 27,687 million, for an interest payment made to the International Monetary Fund (IMF).
“Currently, the field is not liquidating the harvest as the market expected. Of the total soybeans expected to be harvested, only 8% has been sold with a price, while the remaining 92% has no price. The field exports little, but due to logistics problems, not because of what they say in the market. Because the harvest cannot come out due to rain problems, ruined roads and other problems,” he commented to Infobae Salvador Di Stefano.
This Monday, the BCRA decided to expand the scope of the Tax for an Inclusive and Solidarity Argentina (PAIS) for the purchase of foreign currency intended for transfers of profits and dividends, and for the subscription of bonds Bopreal (Bonds for the Reconstruction of a Free Argentina) issued for the importing sector, with the idea of encouraging national investment and guaranteeing a sustainable fiscal path.
The decision implies “a forceful externalization of the dependence on the PAIS Tax as well as the tax pressure. Let’s think that these dividends are subject to schedular tax,” he said. Salvador Vitelli, Head of Research at Romano Group. “To this we must now add the PAIS Tax, which adds fiscal pressure to the private sector,” he said. “Dividends pay profits, schedular tax and now COUNTRY Tax,” he explained.
The “blue” quote of the dollar gained five pesos this Monday, to operate at $1,045 for sale. The currency thus reached the same value as at the end of April. In 2024 it will rise only 20 pesos or 2%, against accumulated inflation above 60 percent. With a wholesale dollar that advanced 1.50 pesos to $880 pesos, the exchange gap remained at 18.8 percent.
“The lowering of rates ordered by the BCRA will certainly help for the recovery of credit, with positive signs in the supply – the reduction of rates and return of mortgage loans-. However, it is necessary for activity to show more robust signs of recovery in the coming months for the private sector to increase its demand for credit,” he estimated. Delphos Investment.
