Wells Fargo warned that Argentine assets discount a too favorable scenario. Although he recognizes economic advances, he adopted a neutral posture about sovereign risk.
In his latest report on Argentina, after a visit to Buenos Aires in which he held meetings with actors from the financial and political sector, The American bank Wells Fargo adopted a more cautious vision on the immediate future of the country. Although he recognized the advances made under the management of Javier Milei “Particularly in fiscal, monetary and signs, the entity warned that the Argentine assets could be valuing too soon a perfect scenariowhich includes electoral success in the legislative of 2025, continuity of the reforms, capital income and consolidation of macroeconomic stability.
Before the trip, Wells Fargo considered with an 80% probability that freedom progresses (lla) would achieve a good performance in the elections Legislative this year and would reach 40% of the votes in both cameras, a threshold that the market associates with the possibility of advancing in key structural reforms. However, after their meetings in the country, the bank reduced that probability at 65%by limits of social support and the possible lack of cohesion within the ruling itself.
The report indicates that, although local investors positively value the economic turn and fiscal discipline of Milei, they also state discomfort with central aspects of your leadership. In addition, they stressed that many local interlocutors consider that the 2023 triumph was more a punishment vote against Kirchnerism than a full support to Milei, which generates doubts about the ability to sustain electoral support over time. The risk of low participation in legislative – despite the obligation of the vote – is an additional factor that I could play against the ruling party.
Dollar legislative elections Congress.jpg
Texaspolicy
Despite the improvement in the indicators and the enthusiasm on the part of the market, Wells Fargo maintains a “neutral” position regarding the Argentine sovereign risk. A single local investor coincided with its original diagnosis: considers that assets still do not justify current values and Remember that, after Macri’s legislative triumph in 2017, the reformist impulse failed to sustain and resulted in a new debt crisis.
What dollar Well Fargo expects for the end of the year
As for the exchange rate, The bank projects a weight depreciation path along its analysis horizon. Despite the process of disinflation in progress, it estimates that the combination of lower interest rate, monetary expansion and gradual survey of the CEPO will push the dollar Officer until $ 1,450 around 2026. This would indicate an exchange rate closer to the “ceiling” of the flotation band.
About the dollarizationthe report clarifies that It is not an objective that the government is actively chasingalthough several interlocutors in the market mentioned the possibility of an “endogenous dollarization”, in which the Argentines themselves choose to use dollars to a new crisis or greater distrust in the local currency.
Finally, the commitment to the IMF program It is maintained, according to all the actors consulted, despite the breach in goals such as the accumulation of reserves. For Wells Fargoif Milei manages to be strengthened from the mid -term elections, it is possible that progress is made with greater consistency in compliance with the agreement and the road to a greater integration from Argentina to international markets is allane.
Source: Ambito
I am a 24-year-old writer and journalist who has been working in the news industry for the past two years. I write primarily about market news, so if you’re looking for insights into what’s going on in the stock market or economic indicators, you’ve come to the right place. I also dabble in writing articles on lifestyle trends and pop culture news.
