The growing political tensions between the Government of Javier Milei and Congress after opposition deputies gave half-sanction to an increase in pensions that would put at risk the fiscal goals of the Ministry of Economy, creating an erratic climate in the Argentine stock market due to speculative rearrangements of portfolios. The titles of debt in dollars they lose around 1% throughout the curve and push the risk country upwards, until it reaches 1,565 points.
The new retirement formula would imply an increase in spending of approximately 0.4 percentage points of GDP, it is rejected by the ruling party and would be vetoed because it threatens the fiscal balance according to statements by Milei.
“There is no possibility that the government can cover the expense that this increase means, because it does not have the resources,” the Chief of Staff said in statements to Radio Continental. Guillermo Francos.
In this framework, the leading index S&P Merval of Buenos Aires fell 2.9% to 1,525,083.67 units, after falling 0.66% in the previous session and collapsing 4.7% on Tuesday. It is the fifth consecutive round of losses for the Buenos Aires index.
If the fate of Merval is measured in foreign currency, the loss is even greater, because the decline in peso prices coincides with a rather upward trend in financial dollars, which means that today the fall in dollars is somewhat smaller, 2, 7%, but they bring the accumulated so far in June to -11.5 percent.
“An attitude of greater caution prevails among operators waiting for the tensions and political uncertainty that have been rising recently to ease, which is opening space for a stage of more decisive correction,” an economist told the Reuters agency.
“Weakness is spreading among domestic assets, with the country risk already at 1,500 points, given that a more cautious attitude prevails among operators waiting for tensions and political uncertainty to ease” (Ber)
In the midst of renewed political tensions, Milei seeks for the Legislative Branch to advance in the vote on the so-called “Bases Law” and the fiscal package that already has half a sanction in the Senate.
“Weakness is spreading among domestic assets, with the country risk already at 1,500 points, given that an attitude of greater caution prevails among operators waiting for the tensions and political uncertainty that have been on the rise recently to ease, which which is opening space for a stage of more decisive correction,” said the economist Gustavo Ber.
“Added to these political noises are concerns regarding a possible payment of the swap with China, which would be added to the upcoming debt commitments in dollars, which would put pressure on currencies. This is precisely at a time when volumes are not rising and the pace of BCRA purchases immediately feels it and thus the accumulation of reserves is being moderated, crucial in this stage of greater seasonality before the usual second semester that is associated with a lower arrival of exports. Parliamentary initiatives that imply greater expenditures also raise concerns when the fiscal balance – and its strong defense – is at the center of the scene since, in addition to the economic effect, they feed back into the circle of tensions, “he added.
In New York, meanwhile, 15 of 21 American depositary receipts (ADR) of Argentine companies listed on Wall Street show red numbers. A bank, a sector that usually suffers from doubts about the progress of the macro and enjoy good news in the same area, once again leads the falls this Thursday. This is the ADR of BBVA Argentina, which fell 3.88% shortly before 1 p.m. in Argentina.
However, this time Wall Street investors also cast their doubts on an energy company. Pampa is second among the most losing Argentine ADRs, with a drop of 2.58 percent. Despegar, with 2.63% and Banco Macro with 2.60%, also stand out.
