What is the market expectation for the Bases law?

What is the market expectation for the Bases law?
What is the market expectation for the Bases law?

The presiding body Martin Menem will meet from noon on Thursday and there is an agreement between La Libertad Avanza and the dialoguers for accept the Senate changes, although they will insist on the replacement of the Income Tax and the changes in Personal Assets. What does the market expect?

Turning point and new stage

The final sanction will be a milestone and a turning point in his management due to the volume of reforms that contains each of these two laws, which for the president constitute the necessary toolboxes.

Beyond the content of the reforms, what is truly relevant about the final sanction of the Law Bases is he political message that manages to radiate outward, especially towards investors.

In a scenario of such economic instability, with the Country risk skyrocketed, Argentine stocks and bonds in a nosedive and the parallel dollar in record values, the news that the Government managed to tame the political system through parliamentary agreements that crystallized into flagship laws, It is no small feat for Milei and a Government that navigates uncertain waters.

With these laws under his arm, the president will lead the postponed May Pact on July 9 in Tucumán, on the occasion of the Independence Day.

What is the market’s view on the approval of the Bases law?

According to the latest report from Consultation, “In macroeconomic terms, immediate vs. medium-term benefits are weighed, which are still palpable. Greater investments, greater flexibility in the labor market and optimization in the composition, spending and income of the State will take time to mature. The rejection of the restitution of Earnings and Personal Assets adds a challenge to the fiscal consolidation objectiveanchor of the economic program.”

However, he affirms that “the political victory that the approval of the law Bases It is an achievement of the Government that cannot be underestimated. The approval acts as a breath of fresh air to the weak governance, derived from a party that only has 7 of 72 senators and 38 of 257 deputies.”

For its part, Santiago López Alfaro, president of Patent of Securities, assured Ambit that we are likely to have a “recovery of Argentine assets” and stressed that the energy sector will be the most benefited with a rise in the stocks of YPF, Vista and Pampa. Finally, he also expects a rebound in sovereign bonds that produce a fall in country risk.

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The market expects a victory for the Government in the Chamber of Deputies

Finally, Delphos Investment highlights in its daily report that once the sanction has been achieved, the Government “must continue to advance in the monetary normalization”.

The least evolved front is the exchange rate, which not coincidentally presents tensions in the short term. These are not only given by the unfavorable context of regional currencies, but also by the need to make changes once the laws are passed in Congress,” the report explains.

And he adds: “The same minister (Luis Caputo) He said this would enable the elimination of 10% of the PAIS tax. We understand that this change, adding to the need to deactivate the 80/20 exchange rate split, They could enable a door to “unification” of the exchange rate without too much cost in terms of the transfer to prices (we are not talking about lifting the CEPO). The government insists on maintaining the 2% crawling peg betting on a convergence of inflation at this level”.

“With the Fiscal and monetary fronts now more orderlynow it seems to be finally the turn of the exchange rate front. No country seeking to attract capital and return to international markets can Maintain the level of exchange regulations “our country is currently facing. The necessary changes are more than evident, although we must also say that this is the most complex task since the lack of dollars and the legacy received in this regard are really challenging,” the survey concluded.

Source: Ambito

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