Argentine shares climbed up to 10.5% and the S&P Merval jumped 6.6%: what whetted investor appetite

On the New York Stock Exchange, the papers of Argentine companies operate with widespread increases. It highlights the progress of View Energy (+10%); America Corporation (+7.6%); YPF (+7.2%); IRSA (+6.6%); and Pampa Energía (+6.2%). The assets of Miguel Galuccio’s company soared after Morgan Stanley raised its target price to $30, two-thirds above its current price (around $18).

In addition, the broader energy sector was boosted by a sharp rebound in oil prices, after Iraq was forced to halt some of its crude exports from its Kurdistan region, while measures to stem a potential oil crisis banks that could affect the demand for crude oil also supported the market. Brent crude futures added $3, or 4%, to $77.99 a barrel. Meanwhile, the U.S. WTI benchmark rose $3.15, or 4.6%, to $72.52 a barrel.

Learn more – Follow the price of the blue, official, CCL and MEP dollar in Argentina

In the Buenos Aires stock market -which began the day with some technical problems-, BYMA’s S&P Merval flew 6.6%, to 233,739.39 units, with the boost in demand led mainly by energy papers, and in second place, financial stocks, after accumulating six consecutive weekly drops. Thus, it cut monthly losses to less than 6%.

Among the most salient advances of the day, appeared the actions of Pampa Energía (+10.5%); Central Port (+8.6%); Transportadora de Gas del Sur (+8.2%); YPF (+8%); Transener (+7.6%); and Transportadora de Gas del Norte (+7.5%). In turn, bank papers climbed up to 6.9% (BBVA).

“The strong rises in Argentine shares could originate from the political reading left by Mauricio Macri’s decision, in addition to a more relaxed external context. The loss of his candidacy would give the opposition more chances of victory, beyond the fact that they still the internal remains to be defined”, commented an operator to Ambit. The PRO referent ratified on Sunday his decision not to participate in the next national elections, through a video that he published on his social networks, where he asked “not to follow messianic leaders anymore.”

Another operator remarked to this medium: “There is relief, so to speak, because (Mauricio Macri) surely won the Cambiemos internship, but he put the general contest at risk for the opposition, against a Peronist candidate. Now, on the other hand, the path seems paved for a victory of JxC”. Along the same lines, from a stock exchange company they maintained: “The announcement strengthens the opposition coalition and I think that any other candidate, be it Patricia Bullrich or Horacio Rodríguez Larreta, would be more competitive for a runoff than Macri himself.”

For the financial adviser Salvador Di Stéfano, on the other hand, although “Macri’s decision is a good gesture”, I believe that “it does not move the ammeter to generate a significant change of course for the country”. “There is still a long way to go, although we are entering a discount time for the candidacies. Let’s remember that the lists close on June 26 and we are less than 90 days from that date “commented

As can be seen, in addition to the global situation and the performance of the local economy, Political issues are also beginning to weigh on the decisions of the operators since the candidacies for the primary presidential elections in August and the general ones to be held in October are gradually becoming clearer.

For his part, the scarce reserves of the Central Bank (this Monday it sold another US$95 million and gross reserves fell by more than US$443 million to US$37,157 million)high inflation, which exceeds 100% year-on-year, and a high deficit in public accounts are issues that worry investors.

Let us remember that last week, the Government announced a bond swap to which public entities must adhere to deliver dollarized securities in exchange for other pesified ones in an attempt to decompress the alternative exchange market. This decision punished the prices of dollar bonds, but led to a decline in financial exchange rates.

Amid fears about the future of world banking, The Federal Deposit Insurance Corporation said First Citizens BancShares Inc would take all of Silicon Valley Bank’s deposits and loans from the regulator, alleviating fears about the banking crisis and whetting appetite for riskier assets globally. Also, rumors helped that the Fed would extend the emergency aid package to troubled institutions.

The Dow Jones Industrial Average rose 195.08 points, or 0.6%, to 32,521.50; The S&P 500 Index gained 6.76 points, or 0.2%, to 3,977.75, while the Nasdaq Composite was the jarring note, losing 55.12 points, or 0.5%, to 11,768.84. (for a profit taking).

The S&P500 Banking Index rose sharply, while the KBW Regional Banking Index also rose. Shares of US banks JPMorgan Chase & Co and Bank of America gave the S&P 500 the biggest boost on Monday.

Shares of First Citizens BancShares soared 53.7% after announcing it would buy parts of Silicon Valley Bank, which plunged earlier this month into the biggest bank failure since the 2008 financial crisis, sparking fears of liquidity problems in the sector.

There was also a strong rise in US bond rates: the 2y rose 23 bp to 4%, while the 10y rose 15 bp to 3.53%.

Bonds and country risk

In the fixed income segment, sovereign bonds closed with a majority of losses, extending the losing streak of recent weeksdeepened in recent days after the Government’s announcement about the exchange of titles in the hands of public entities.

In New York, the day began with a positive sign, however, as the hours passed, the losses of the last days reappeared. Among the most important falls, there were the Bonar 2038 (-0.9%), and the Bonar 2041 (-0.8%). In the local market, meanwhile, losses were led by the Global 2030 (-3.5%), which pierced US$27; by Global 2046 (-2.9%), and Global 2035 (-2.8%). “The debt swap in public bodies continues to raise doubts, both because of its effectiveness and because of the greater pressure on parities,” an operator commented.

In that framework, the Argentine country riskas measured by JP Morgan, appeared little changed around the 2,530 basis points, after touching a maximum since last November 7 (2,549 points).

For their part, dollar-linked sovereign bonds operated mixed, with the short tranche rising 0.1% and the long tranche falling 0.2%. The duals. meanwhile, they operated takers in general, closing with increases of 0.2% on average, with the exception of the TDL23 that fell 0.2% at the end of the wheel. Regarding the CER segment, the Leceres closed with increases of 0.5% while the Bonceres showed somewhat more demand and gained an average of 0.9%, reported SBS.

The recent exchange of dollarized bonds “is not a beneficial measure nor a disaster that leads us to the abyss,” said the economist Rodolfo Santangelo and pointed out that “with this measure you can lower the (exchange rate) gap, but for a few days. Here the issue is not who sells the bonds, the issue is who buys it. The problem of the capital market is demand, not supply” .

“The impact of the measure in the short term was not welcome. In bonds payable in foreign currency maturing in 2030, the price fall was greater than 4%, while the prices of financial dollars fell close to 3%, due to the expectation of greater selling pressure”, said consultancy EcoGo.

“Only as a conjecture, the Government could be sowing seeds for an eventual exchange rate unfolding, within the package of measures that have just been announced,” estimated Jorge Vasconcelos, of the Mediterranean Foundation. “Comparing current Rofex (futures) rates with inflation and the policy rate, we believe rates may continue to rise in the near term if they continue on an overshooting path as discouraging data continues to emerge.” Delphos Investment said. “However, if the economic team manages to tame the macro, these implicit rates look high but the current uncertainty and potentially bad inflation data for March leads to prudence dominating the scene,” he noted.