ADRs fall to 5.4% and country risk remains at 2019 lows

The S&P Merval shares fall up to 5% and dollar bonds also retreat this Wednesday, despite the positive outlook of investors due to the encouraging prospects for the domestic economy. However, the country risk remains firm at 2019 lows.

In the fixed income segment, dollar bonds lost up to 1.3% led by the Global 2046followed by Bonar 2038 (-0.8%) and the Bonar 2029 (-0.5%). Although he country riskmeasured by the JP Morgan holds on 751 basis points, minimum of April 2019.

“The Argentine bond and stock market is mature enough to begin carrying out short-to-long bond arbitrage operations, waiting to boost profits, collect a greater number of securities, improve the written rate and move away from maturities,” he estimated. the analyst Salvador Di Stefano.

S&P Merval and ADRs

The index leader S&P Merval drops 2.7% to 2,241,393.91 units (measured in dollars it is located at 2,026 points), after rising almost 2% at the beginning of December and accumulating an increase of 22.15%. In this scenario, the roles that go down the most are those of Telecom (-5%), Edenor (-3.8%) and Silver Commercial Society (-3.7%).

For their part, the ADRs fall up to 3.8% led by YPF, Black Hill (-3.8%), BBVA (-3.1%), Transportadora Gas del Sur (-3%), and Bioceres (-2.2%).

The analysts’ view

From Delphos Investment they indicate that it is interesting to analyze what the exit yield of the Global (GD35) would be to match the returns of the Lecap, considering the projections of the 2025 budget. At the time of their publication, these projections seemed unrealistic, and many analysts considered them too optimistic. However, with the consolidation of the stabilization plan, these goals now seem achievable.

“In a scenario where the crawling peg evolves at 2% monthly until May and then at 1% monthly, the official dollar would reach 1207 in December, and a value of 1150 for July. Assuming an exchange gap of 0%, the S31L5 would generate a yield of 17%, which would imply an exit yield of 10.5% for GD35 (convergence with Angola)”, they point out.

“Although we consider that exchange rate stability, supported by solid fiscal and monetary anchors, is sustainable in the short term, opting for the carry trade in pesos against the sovereign curve in dollars represents a more aggressive strategy,” they point out.

And it is that ““any noise in the exchange rate, such as an eventual exit from the stocks, could impact the returns of this strategy”. Furthermore, we do not assign much probability to an increase in country risk to levels above 1000 points, given the evident advances in the capacity and willingness to pay demonstrated by the government. Therefore, while the carry trade requires a greater tolerance for currency volatilitythe sovereign curve in dollars could offer a more conservative option in the current context of economic stabilization.