Argentine stocks operated with broad improvements this Thursday, with businesses encouraged by the Senate’s approval of a package of laws promoted by the ruling party that seeks to get the country’s economy back on track, although some short profit-taking was recorded after a start with strong increases.
The upper house of Congress approved a series of liberal reforms proposed by the president in the early morning Javier Milei that give a signal of governability to the markets, although he rejected tax changes.
By observing the performance of ADRs (acronym in English for American Depositary Receipt) of Argentine companies that are traded on Wall Street, the revaluation in a single day of the firms in the banking and energy sector was notable according to their market capitalization, for a total of 1.7 billion dollars.
The market capitalization of several Argentine companies grew by more than USD 200 million: TGS, YPF, Grupo Galicia and Banco Macro
In the case of YPF raise it in your market cap It was USD 260 million on the day. The oil company’s shares rose 2.4% in New York and the company’s stock market value increased from USD 11,375 million on Wednesday to 11,635 million this afternoon.
Similar growth (+USD 243 million) was recorded Galicia Group (+3.7%), from 6,552 to 6,795 million dollars. Macro Bank (+4.7%) increased its market capitalization by USD 222 million, from 5,039 million to 5,261 million dollars.
Among companies in the energy sector, the 6.8% increase in equity securities stood out. Transportadora Gas del Sur, whose stock market valuation increased the most in absolute terms (USD 270 million), from 3,699 million to 3,969 million dollars. In relative terms, the most winning role was that of Supervielle Bank (+10%), although due to being a smaller company, the nominal profit was limited to USD 101 million, from 765 million to 866 million dollars.
“The market reacted favorably to the approval in the Senate of both the Bases Law and the fiscal package, after months of negotiations. We consider that the market celebrates that, finally, the ruling party was able to approve an initiative – in this case two – in Congress despite the parliamentary minority. We emphasize that the Chamber of Deputies still has to ratify the changes,” he said. Juan Manuel Franco, Chief Economist of the SBS Group. “That said, we believe that caution should still prevail looking at the coming weeks. We say this because the approved fiscal package does not include the changes in profits and personal assets that the Government intended, which involved key resources for public accounts this year,” he added.
“Two key laws were approved in the Senate and the Chinese swap was pushed forward. Without a doubt, the best economic day for the Government,” commented the financial analyst. Christian Butler. ”The approval of the laws in the Senate, beyond the tightness of the votes or the changes made, manages to show a certain degree of governability on the part of a Government that came in as a minority and that is very positive,” he said.
To achieve approval by the Upper House, the Government agreed to modify the original project that included benefits for multi-million dollar investments, the privatization of some public companies, money laundering and special powers for the President.
“We see what happened in the Senate during the early hours of the morning as positive, given that most of the articles of the laws were approved with relatively benign changes,” he reported. Balanz Capital. ”Although the rejection of the Personal Assets and Earnings reform generates noise, it is worth mentioning that they were rejected with simple majorities, so the deputies can insist on their original wording with a simple majority,” he said.
In the session, the Senate rejected modifications on taxes on high salaries and personal assets, contained in a tax reform discussed separately. The bill must be discussed again by the Chamber of Deputies to endorse the modifications or insist on the text that was approved in the session on April 30.
“The Government needed to approve these laws, not only because of the tools it provides, but also to show the ability to govern despite the bad numbers it has in Congress,” he told Reuters Maria Minattaeconomist at Empiria Consultores.
“This ‘shock’ of confidence will revitalize the demand for Argentine assets and the demand for money, it will calm expectations of devaluation and will help two phenomena to deepen in the second half: the recovery of economic activity and the decline in inflation” , he assured Eugenio Marifrom the Freedom and Progress Foundation.
For the economist Gustavo Ber“the general approval of the Bases Law and the fiscal package in the Senate, beyond the setback in some chapters that could be resolved in Deputies, was very well received by investors more than anything based on the positive sign of governability” .
“It happens that political support, which includes generating consensus to have the capacity to approve laws, is crucial to promoting many of the reforms in the pipeline to improve the sustainability of the fiscal balance and the efficiency of the public sector. Additionally, investors positively received the renewal of the swap with China and the steps that are being taken towards an exit from the stocks,” added the head of Estudio Ber.
