After five consecutive rounds of decline, the Argentine assets got a break and recovered some of the ground lost during the week. Although it was not enough to reverse the rise in country risk that It started the week just above 1,300 basis points to close it around 1,600, the recovery during the day put a stop to a series of falls that was beginning to set off market alerts. In that sense, it calmed the debate about whether the accumulated decline of 9% in bonds listed on Wall Street, for example, was a simple correction after having risen more than 40% in the year or if what was happening was a cycle change. The answer is not yet clear but today’s improvement at least temporarily dispels the worst speculations.
However, during the week, debt securities listed abroad accumulated an average drop of 9% while the locals did so between 3% and 5%, contemplating average increases of 2% during today’s round.
The bad weather first appeared in the exchange market, with the rise of the dollar as soon as the Central Bank rushed a deep drop in the interest rate, but in the following weeks it spread to the rest of the assets due to the new complications that arose on the front. political when moving forward with economic reforms.
“If the Government manages to overcome the legislative obstacles and achieves the approval of the Bases Lawthe situation with the Bank of China is clarified and the Board of the IMF (International Monetary Fund) approves the disbursement, we could observe a recomposition of expectations that stops the bleeding in local securities” said Portfolio Personal Inversiones.
He thus summarized the main concerns that exist in the market today. One of them is that, in the coming weeks, Argentina will have to renegotiate or reintegrate almost USD 5,000 million to China for a currency exchange that the previous Government negotiated, while the IMF is expected to approve a disbursement of about USD 800 million. after an agreement on the eighth review of the current program.
In this framework, the leading stock index S&P Merval of the Buenos Aires Stock Exchange also took some oxygen and advanced a slight 0.5% after collapsing 9.37% in the previous three sessions. ”Given that we are still waiting for more compelling signals to think about a sustainable macro normalization, we believe that caution should prevail in terms of investment,” said the SBS Group, while the consulting firm AdCap Securities assured that “bond prices “They will move in the future around the advancement of the pension formula in Deputies promoted by the opposition and that could complicate the fiscal balance.” This project to sanction a new pension mobility formula in the Chamber of Deputies, which still must be approved by the Senate and is rejected by the Government, was one of the key axes of the bad mood in the market.
Regarding the exchange market, the Central Bank had to sell USD 27 million in the last round of the week, which revealed the greatest difficulty in buying foreign currencies despite going through the harvest season in which the liquidation rate is more slower than expected. Financial dollars, meanwhile, operated without major shocks and remained at $1,306 for cash with settlement and $1,282 for the stock market dollar. The informal dollar, meanwhile, recovered the $15 it had lost yesterday and returned to trading at $1,265 at closing time.
”In a context of lower nominal rates, the fall in export settlement flows was behind the rise in the CCL, although in real terms it is still below the levels seen in the last four years,” said the SBS Group.
