He S&P Merval and the economic growth they disconnected in their march between 2023 and 2024. He stock selective marked its biggest rise in 20 years, while a new drop in the Gross Domestic Product (GDP). What are the prospects for 2025?
He local leading index went up 360% in 2023 and 172.5% in 2024, while measured in dollars it rose 64.8% and 123.5%respectively. Under this context of strong stock market gains, the GDP gave in 1.6% in 2023 and is projected to 2024 another drop 2.6%, according to the Survey of Market Expectations that relieves the Central Bank (REM – BCRA).
However, This disconnect is unusual.. “From 1991 to 2023, the 80% of the time they moved in the same direction. And, since then, it has never happened that both variables go in the opposite direction for two consecutive years, with the exception of the 2023-24 period,” they highlighted from Delphos Investment.
“The rise in the selective index in 2024 reflected future prospects and expectations and was not so related to current activity. In 2025, the reflection that real activity will have with respect to the stock market will be very important.“he emphasized in dialogue with Scope the analyst Epyca Consultants, Eric Paniagua.
GDP and stocks by 2025
The Argentina’s economic growth outlook is favorable for 2025Therefore, this stellar rise in the index could be maintained. It should be noted that the REM foresees that the activity is increased a 4.5% during this year. For this reason, the consultant points out that the trend of S&P Merval could be sustained. “This has happened in other countries in the world with changes in economic regime, where the greater economic growth was also reflected in their respective stock indices,” he analyzes. Delphos.
In that same sense, the economist Gustavo Ber He added: “Financial optimism responds to the fact that investors usually seek to discount the progress in the economic plan that has materialized. Likewise, it is extended given that the positive expectation for this year continues to be valid.”
But, the consulting firm wonders how much of this is already discounted in prices, because the Merval, measured in dollars, is at real historical highs, that is, adjusted for US inflation. “What we see is that the vast majority of Argentine stocks are trading at multiples between reasonable and high, no longer given away, which from our perspective require delivery of promises,” he noted.
Paniagua He agreed that, beyond the huge rise that occurred in the selective during 2024, “Argentine stocks were very punished compared to the rest of the region” and currently have a more “adequate” price.
Portfolio rebalancing
After the stellar rise of the selective, Delphos recommends rebalancing portfolios. However, the suggestion does not come from the fact that the local stock market has no potential, but because it suggests that not all company shares are exposed to the promising future of the economy, and not all can justify their high valuations.
In that sense, Ber agreed with this vision, and highlighted that the financial markets responded more quickly than the real economy, which is why he estimates that stock gains could go “reducing” as the economy gains pace given that the financial markets were already anticipating it.
Source: Ambito
