In a short week due to three local holidaysanalysts give their opinion on the challenges that lie ahead for the Government after the approval of the law Bases and the approval of the IMF review. In this sense, the consulting firms foresee a rebound in assets and a country risk that pierces the next target level of 1,200 basis points. Everything, if there is no external headwind that interferes with the trend.
The Argentine markets remained closed on Monday for the commemoration of the “Passage to the Immortality of General Martín Miguel de Güemes”, while on Thursday the “Flag Day” will be celebrated and on Friday a ‘bridge’ holiday was arranged for tourist purposes. .
The Government’s challenges for this short week
Last week, the Senate approved with modifications a package of reforms promoted by the ruling party which must be endorsed by Deputies, while the inflation data for may, below analyst estimates, confirmed the trend of deceleration in price increases in the first part of the year.
On the other hand, it was renewed a ‘swap’ of currencies for about 5,000 million dollars with China and the International Monetary Fund (IMF) approved a review of goals that allows the country a disbursement of 800 million dollars.
“The trifecta of the week (China, Bases Law in the Senate, inflation data for May at 4.2%) decompressed the profit taking that had been boosted since the accelerated disarmament of paid liabilities of the central bank (BCRA) against Treasury Lecaps (bills) three weeks ago,” said the consulting firm EcoGo.
“In a shortened week, the focus will be on Congress when the debate is held on the modifications made by the Senate to the Base Law. In addition, On Tuesday the fiscal result for May will be known and on Wednesday the trade balance for May will be reported,” Balanz Capital said.
An IMF report said on Monday that high-frequency indicators suggest that the country’s activity would be stabilizing and real wages would be at a floor. “The ‘combo’ of favorable news undoubtedly contributes to feed back positive expectations of economic agents, which within a context that adds signs of governability and political support remains enthusiastic about being able to continue walking the hard path towards economic normalization,” said economist Gustavo Ber.
The combo of positive news: And now what will happen to the Argentine assets?
“Argentine assets should maintain their upward trend and manage to approach recent highs if the external context does not diminish momentum. The next objective should be 1,200 country risk points and then 1,000 points in the medium term,” said Delphos Investment.
“The prospects are that the government will have to adapt its plans and if a similar reaction does not occur, the situation could become very challenging,” estimated VatNet Financial Research.
“Times are getting shorter, so We estimate that there would finally be some benefit for exporters based on higher income and/or lower expenses, given that at the moment there are not many alternatives in sight,” he added.
“With the approval of the Bases Law in the Senador, investors are now hopeful again. The political turbulence had been a drag on the country’s risk reduction, which a month ago had not reached 1,200 basis points,” said GMA Capital.
“Freed from that key source of uncertainty, the market now can resume the discussion on yield compression. In other words, it could be an ideal situation to evaluate the convenience of adding Argentine risk to portfolios under a normalization path,” he noted.
“Last week showed that delivery in terms of economic policy is a fundamental driver, so positions must be adjusted to the expectations of each investor in relation to the economic normalization process,” stated the SBS Group.
Source: Ambito
