He economic direction of Javier Milei’s government It keeps the market expectant and the analysts of the city of Buenos Aires are optimistic. However, political tension generates noise.
“We are in a context where We have a government that is trying to do something very complex under political conditions. and social conditions that are not conducive to doing so. Any government that faces the challenge of making an adjustment also faces suffering wear and tear”said political scientist Lucas Romero in radio statements.
“This is Milei’s challenge, it is that of a government that He has to order the economy before politics gets disordered. That is, decisions had to be made to organize the economy, to put it in healthy conditions so that it produces growth and benefits for the people, but For that you had to take others that were going to cause pain.”
Is the carry trade closed?
“While we continue to believe that the strong appreciation of the peso makes carry positions riskier, “The government remains firm in containing the gap given the disinflation objective,” stated the SBS Group.
Optimism continues to be fueled mainly by a growing appreciation of the process of normalization of the economy, a increased appetite for global risk and money laundering. Investors turn to the market in search of profitability for their funds, all in a world where Central Banks are at this stage more oriented toward “easing” strategies, said economist Gustavo Ber.
“If the Government decided to reduce crawling To further support the disinflationary process, it would be expected that the Treasury reduce rates in pesos (do not validate ‘prize’ in the next tender) to avoid a widening of the spread with the pace of devaluation,” estimated Portfolio Personal Inversiones.
The investment landscape
“It is notable greater financial optimism, which should be tested soon given the signs of economic weakness that have not yet been overcome,” said VatNet Financial Research.
“Since the ruling party won the elections in the runoff, public service companies were the second best performers among local stocks, with an average return of 147% in dollars, only surpassed by banks“Delphos Investment recalled.
“The sovereign bonds in dollars continued to compress yieldsbut they show a certain sign of exhaustion, which we estimate is a product of the fact that we are halfway to the end of the extension of the money laundering period,” said Andrés Vernengo of Capital Markets Argentina.
“The unknown is at what point we will see profit taking along the dollar curves and at what rate they will find a support level.“he added.
* “The stocks can wait, as long as the dollar prices in the market allow companies to be able to remit dollars abroad by purchasing the bills freely between individuals. Today the gap between the export dollar and the CCL dollar (counted with liquidation ) is barely 15.5% and could be reduced to 0%,” estimated analyst Salvador Di Stefano.
“In the last quarter of the year, the government was able to validate a financial surplus thanks to the income from the moratorium and improvement in economic activity, a reduction to zero of the country tax, a drop in country risk, convergence of the rate in pesos adjusted for inflation with the rate in dollars, and that alternative dollars are quoted at levels similar to the wholesale dollar,” he added.
“At these prices, it seems healthy to make a profit taking on sovereign bonds taking into account the rally that they had in recent months. For those with a more long-term vision, bonds with longer maturities look more attractive,” Rava Bursátil said.
“In a context of stabilization of the Argentine macroeconomy, with lower inflation and volatility in the financial exchange rate, Argentine real rates are positioned as one of the most attractive in the region“said Delphos Investment.
“Since the beginning of 2024, due to a greater drop in inflation than in nominal rates, we have observed a very pronounced increase in the real performance in Argentina“he added.
“The extraordinary returns of local assets have not taken a break since July. The euphoria is greater every day, both in the world of pesos and in that of hard dollar debt. Win, like and score“could sum up the last few weeks of the financial market,” said consulting firm GMA. “Investors continue to ‘watch’ it and they have reasons to do so. However, “We must not take for granted the capacity of ‘enduring’ society or external financing that does not yet seem assured,” he added.
Source: Ambito
