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Learn about the Argentine stocks that would climb up to 250% in dollars, according to Morgan Stanley

Learn about the Argentine stocks that would climb up to 250% in dollars, according to Morgan Stanley

According to the investment bank, Argentina will have no other alternative than to go towards an adjustment of public accounts due to the lack of financing and the shortage of reserves in the Central Bank. The conclusion is that the bonds are still very cheap, even in a restructuring scenario and it also recommends a series of actions, although in a more segmented way.

According to the report, the relationship between risk and return when positioning in Argentine assets is favorable. This means, in other words, that certain risks are worth taking because the chance of profit is even higher.

“This time the markets will not give Argentina the benefit of the debt, as happened in 2015. Therefore, there will be no room for gradualism when facing the fiscal situation and the reforms that are necessary to stabilize the economy”, ensures the report Morgan Stanley.

According to the analysis linked to the debt market, considers that a fair value for the bonds would be around US$37, or 50% on average over current prices. And they particularly recommend the 2035. “Perhaps a restructuring is not even necessary. But even if it happens, prices reflect a 40% haircut, which looks exaggerated. Even taking into account very conservative scenarios, we have a bullish stance for Argentine bonds”, indicates the work headed by Fernando Sedanoits chief economist for Latin America.

This time the markets will not give Argentina the benefit of the debt, as happened in 2015. Therefore, there will be no room for gradualism when facing the fiscal situation and the reforms that are necessary to stabilize the economy”, they add in Morgan Stanley. At the same time, he warns that an exchange rate adjustment and a rapid adjustment program in public accounts would be both inflationary and recessive in the first stage.

“If Argentina has room to pay the debt in 2024 from financing in the markets remains to be seen, but for that the next government will have to work hard to reestablish confidence,” he adds.

The shares, according to the same report, could have an appreciation ranging from 230% to 270%. Such a rise would be possible from an ordering of the macro, together with a recognition of the exchange rate, as well as a recomposition of the profit margins of the companies. However, he recommends concentrating on some particular papers and not precisely those with the most weight in the index. In particular, he maintains that this is not a good time to invest in bank paper.

Among the favorite ADRs, he mentions those of Adecoagro, as a way of being invested in shares of the agricultural sector. The intention is to point to an improvement in profit margins based on the soybean dollar, but also considering the In relation to energy companies, one of the favorites is Pampa Energía, given the positive effects of the construction of the new gas pipeline possibility of a higher exchange rate in the near future.

In this sector, it also adds to Center Port. In addition, he considers that the value of energy will remain high in the face of the European crisis derived from the war between Russia and Ukraine. The report also highlights Black Hill and indicates that in the case of Free marketa future devaluation of the official exchange rate in Argentina would cause a decrease in the weight of the country within the company’s operations.

Despite the optimism regarding the future of local stocks and bonds, the Morgan Stanley report does not ignore the complex scenario that lies ahead, far from it: “The situation that the future administration will receive is much more complex than that of 2015. Starting with an inflation that is triple that at that time and that would be close to three digits by the time of the election,” add.

Source: Ambito

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