With the recent approval of the Bases Law, there were several movements in the market that responded significantly. Some key economic indicators show how the financial environment is behaving and what investment strategies They could be the most appropriate in this political and economic panorama. In this article, we detail where you can place your money, in an environment where the pressures generated by inflation are moderate and the dollar remains stable, providing strategies to maximize your returns and manage risks, and taking into account several important points when it comes to to think about an investment in Argentina.
In this context, LECAPs are the best option for short-term investments, while sovereign bonds, negotiable obligations, Argentine stocks and CEDEARs yield more for the medium and long term..
Strategies for investments in the second semester: dollars, bonds or CEDEARs?
1.Short term
If the dollar is going to be stable, only within a period of 30-90 days investing in pesos is fine and A good option is LECAPs, which are purchased in an investment account, and there are different maturities, and they beat the fixed-term returns by above 2% per month. The advantage of this is that I can sell whenever I want, and the performance will depend on the price you sell the letter, but if you leave it until the end you guarantee a rate.
For those who want to be calmer and want someone to take care of reinvesting in maturities, a 100% LECAPs fund is also very good, in both cases the investment minimums are 10,000 and 1,000 respectively.
2.Medium and long term
-Sovereign bonds: With inflation on the decline, real bond yields They could be more attractive. Sovereign bonds would have to continue rising in prices due to the decrease in country risk and to validate that the government can roll the debt next year, and they are attractive at this time because this year they are returning capital, AL29, AL30 or Globales GD30, GD35, for example.
The increase in the price of the bonds in pesos and dollars will make me have a profitability higher than inflation and be protected against an increase in the exchange rate. Keep in mind that they are very volatile and I have to keep them in mind for no less than 6 months, although I can sell them whenever I want.
If you don’t feel like doing any of the above, at least having dollars instead of pesos is always good
–Negotiable obligations: This alternative is interesting to have more peace of mind, get away from the risk of the government issuer and go to companies such as Pampa, YPF, which although it is a public part, the potential of that sector is imminent.
–Argentine Stocks: a very volatile market, but with a lot of potential, some that I see potential to take advantage of would be Morixe, financial companies like GGAL, Macro, among others. Energy companies that I see potential for are also those of Pampa and YPF.
–CEDEARS: get out 100% of the Argentine risk, but from your local investment account, through this instrument it is a possibility that generates excellent diversification, and in these instruments I would take advantage of those that are focused on AI (Meta, Nvidia, Apple, For example).
All of these options can also be acquired through mutual funds and if you are just starting out it is a good idea to start with that instrument.
In summary, the approval of the Bases Law had a positive impact on the Argentine financial market, generating increases in global bonds, a reduction in country risk and an appreciation of the S&P Merval index. With falling inflation and a stable dollar, various investment opportunities present themselves in both the short and long term.
What is the general outlook for the economy in the country?
The market reacted positively after the approval of the Bases Law in the Senate. This Wednesday, global bonds marked a slight drop of up to 1% in New York, while the country risk closed at 1,384 basis points. The Cash with Settlement (CCL) fell -2.2% and the S&P Merval index had an increase of 1.2% in dollars. This response reflects the weight alignment and Argentine assets with the legislative outcome.
Exiting 100% of the Argentine risk, but from your local investment account, through CEDEARs is a possibility that generates excellent diversification
Why does the market read the Bases Law as positive? Because there are more certainties. The path that the Government began to take to lower the fiscal deficit, clean up the BCRA balance, lower inflation and stop issuing is a necessary condition to begin this path, but not sufficient.. Political support is essential and being able to have laws that support and provide the framework for economic growth to begin to appear.
As for inflation in May, it was 4.2%, a figure that is below REM expectations, 1 percentage point less than expected. Core inflation surprisingly low at 3.7% It is the most favorable since January 2022. These data, recently published by INDEC, encourage investors, since they indicate a downward trend in inflation, which is very important for economic stability.
IMF, Central Bank and exchange rate stocks
The IMF approved the eighth review of the EFF agreement and a disbursement of US$800 million. The Ministry of Economy and the Central Bank reported that, in the agreement, the objective of eliminating exchange restrictions will not include commitments on dates or specific measures, as could be the case of the exchange rate. This new agreement adds to the positive climate, highlighting the over-compliance of all quantitative criteria and mentioning certain exceptions for new exchange restrictions and practices.
Meanwhile, these days, the obligation to bank dollars for the purchase of securities on the stock market with the rent collections and amortizations received recently. This measure aims to ease exchange restrictions and facilitate transactions in the capital market, which could have a positive impact on liquidity and accessibility for investors.
The Central Bank bought in a single day last week US$137 million in the exchange market, the highest record since May 21. The volume traded suggests that the approval of the Base Law may have positively influenced the supply of foreign currency by exporters. Thus, the Central Bank accumulates a positive balance of US$17,471 million since December, highlighting a sustained improvement in the balance of payments.
Despite the emphasis of the Ministry of Economy on maintaining a high interest rate To control inflation, the yield of Lecaps did not exceed 4.25% TEM. The correction in the CER curve reflects slight optimism regarding disinflation for the rest of the year, with expectations that monthly inflation will average 4.2% between now and December.
Internationally, it has been rumored that Milei could travel to China to meet with President Xi Jinping following the renewal of the currency swap. This possible visit highlights the importance of international economic relations and their impact on the local economy.
