Argentine stocks and bonds closed with negative numbers this Wednesday, in a continuity of the persistent exit from investment positions, given the lack of credibility in the face of political and economic initiatives after the midterm elections.
After a legislative defeat on November 14, the president Alberto Fernandez assured that he will send to Congress a “multi-year” plan in order to close negotiations with the Monetary Fund International (IMF) for a debt of about 45,000 million dollars.
Global exchange bonds -in dollars with foreign law- fell 1% on average and accumulated a 16% average loss so far in 2021, to reach their lows since they went on the market in September last year.
These bonds in dollars with foreign law are the reference for Argentine debt abroad and in some cases, such as the GD35 and GD46 are traded below USD 30, a minimum price since its listing in September 2020.
The risk country prepared by the JP Morgan bank rose 19 basis points to 1,816 units, after scoring a maximum of 1,819 points in the morning, the highest since last year’s sovereign restructuring.
The stock index S&P Merval of the Buenos Aires Stock Exchange fell 0.4%, at a close of 83,481 units, after losing 4.3% on Friday. Even the Merval accumulates an improvement of 63% in pesos so far this year, compared to an inflation estimated by analysts close to 50% per year.
On Wall Street, stocks and ADRs of locally owned companies fell up to 4%, headed by French Bank, Transportadora Gas del Sur and YPF.
Traders believe that the weakness in assets is a reflection of the intrigues generated on Wall Street, given the urgency to agree with the IMF and the uncertainty caused by the loss of the majority in the Senate by the ruling party.
“The movement in emerging markets of the last days is a wake-up call to speed up negotiations in post of not suffering greater exchange rate volatilities in the coming months. Regrettably the opportunity to reach a quick agreement has been missed in the midst of the 2020 pandemic, which would surely have allowed greater concessions for Argentina, and suffer less macroeconomic wear and tear on foreign exchange reserves, “said the economist Joaquin Marque, director of UG Valores.
Dollar bonds fell and country risk reached a new record since the debt restructuring
Jorge Fedio, an analyst at Clave Bursatil, said that “we have run out of trade electoral and the post-STEP drop was repeated, although higher. It could not be different, the political reaction is not consistent with what really happened. The Government in its blindness did not admit defeat and celebrated it like triumph. All a madness that is not understood, does not keep logic, the numbers played against him, they lost millions of voters and on top of that they were left without an automatic majority in the Senate. Instead, the opposition achieved what it set out to do, the parliamentary balance ”.
In addition, the global context influenced the concern over European outbreaks of COVID-19, a potential rate hike from the Federal Reserve and the notorious weakness of the Turkish lira.
“Investors continue watch out for political signals given that they are the ones that will mark the viability of reaching a consensus among the main forces from the presentation of the multi-year economic plan, “he said. Gustavo Ber, an economist at the Ber Study.
On Wall Street, ADRs operated with drops of up to 4% in dollars
“Not only is this challenge complex, in view of the pulls, but also even reaching an agreement with the IMF, the doubts regarding the ability to meet the goals committed in the coming years ”, he added.
In a conference organized by the Central Bank, the Minister of Economy, Martin Guzmansaid it takes refinance debt with the IMF because it is “the main stumbling block to maintain stability ”, pending the plan that it intends to establish the bases of the agreement with the organization.
In the framework of the Monetary and Banking Conference of the BCRA, the official stated that it seeks to “depend less on indebtedness and issuance monetary policy ”to finance the public deficit, in the face of inflation expected to exceed 50% for this year.
The BCRA bought USD 130 million
The Free dollar ended up offered with a minimum drop of 50 cents, at 200.50 pesos for sale, on a day where the stable trend for dollars traded on the stock market.
The dollar wholesaler closed with sales positions in $ 100.62 per unit, about five cents above Tuesday’s close. Thus, the gap between the official exchange rate and the dollar “blue” remains at the 99.3 percent.
In the wholesale round with cash deals for USD 501.8 million, the BCRA raised with USD 130 million, according to private estimates. The Central accumulates a negative net balance of about USD 626 million so far in November for its intervention in the official market, to meet a firm demand, particularly from importers.
Gustavo Quintana placeholder image, from PR Corredores de Cambio explained that “tomorrow’s holiday in the United States stimulated anticipated sales of exporters”That were liquidated in the wholesale market.
In this context, the dollar “Counted with settlement” it rose 16% or almost 30 pesos last week. This Wednesday he finished surgery in the 216.74 pesos. Meanwhile, the MEP dollar (or Stock Exchange) ended agreed at 204.78 pesos.
Likewise, the dollar implicit in the prices of Argentine shares that are listed simultaneously on the Buenos Aires Stock Exchange and Wall Street reached the 219.20 pesos.