The national legislative elections on October 26 are getting closer, and the reality is that it is not known exactly what results they will return. For this reason, the market has already begun to speculate on the possible scenarios that Argentine stocks and bonds could go through.
According Thomas Ambrosettidirector of Guardian Capital, the electoral definition is going to be key. “We already saw what happened in the days after the election in Buenos Aires, where the difference in votes was greater than what the market expected. At this time, investors are acting cautiously and prefer to maintain defensive positions in dollarized and shorter-duration assets,” he indicated.
Stocks and bonds are looking forward to the elections
For the specialist, if the result provides predictability and signs of a consistent economic program, then there could be a spread compression and a rearrangement of flows towards Argentine risk.
In addition, he added that the relationship with the United States is another key aspect to closely monitor, understanding that a favorable result for the ruling party can accelerate these agreements and guarantee debt payments in the coming years.
“This would clearly bring a rapid compression of country risk (rise in bonds in all sections of the curve). As for stocks, a continuation of the ruling party would once again make entry attractive to players from abroad,” said Ambrosetti.
Instead, An opposition victory could generate even more uncertainty about the political course ahead of 2027. “In that scenario we would not see flows seeking to enter Argentina and we will probably see more punished prices in fixed income that matures after 2028 given that it is unknown who will be responsible for meeting those maturities and we also do not know their willingness to pay,” he explained.
For its part, Nicolas GuaiaCEO of Max Capital Asset Management, noted that, as in all elections, the October one offers binary scenarios for stocks and bonds.
“An adverse electoral result for the ruling party could mean even greater losses, for both asset classes. The bonds would also be linked to the progress and size of the US aid package, but the elections will define whether we advance at some point a level of country risk consistent with reissuing debt or not,” he summarized.
The market is not clear about the future of the stock market
In this context, Matías CattaruzziStock analyst at Adcap Grupo Financiero, clarified that some of the most recommended stocks are those of Vista Energy and Pampa Energíacompanies that have mostly dollarized income.
“The rest of the sectors demand caution. The regulated ‘midstream’ with strong cash generation and established for the next five years may suffer a little more from a jump in the exchange rate, but within that sector we are left with Transportadora Gas del Sur because it also has unregulated income to cushion volatility. Finally, in the banking sector, we believe that it is a tactical trade, but it depends on the electoral result which, in the event of a positive result, could register considerable profits,” he added.
Anyway, There is not much clarity about how equities in general could behave until the end of the year. “It is very difficult to predict the evolution of variables in an extremely dichotomous context. In short, the only truth is what the assets have in price. Today, the implicit volatility in the options market indicates that the market prices a Merval with a width of +-25% for December. In principle, it looks conservative, and it is likely that the gap will widen as we approach December 26. October,” he said Alan Versallianalyst at Cocos Capital.
Source: Ambito
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