S&P Merval continued its streak and jumped almost 17% in 3 days; bonds flew up to 8.2%

The Buenos Aires stock market continued its streak this Wednesday, March 29 rose strongly encouraged by speculative repurchases of portfolios in short-term positions. Bonds recovered strongly and flew up to 8.2% in a day where the country risk decreased. It happened in the face of a greater appetite for risk driven by international markets given the momentary calm after the conflict with the banking sector in the United States and Europe.

BYMA’s leading S&P Merval Index improved 2.8% to 249,104.1 units as temporary closure, to accumulate ora firm rise of 13.6% in three consecutive sessions. “Came back a slight appetite for risk to the financial markets and that is why global stocks are up this wednesdayeven in Latin America,” said Alexander Londoño, market analyst at ActivTrades.

What happened this day was that the banking turmoil, which began in early March with the failure of Silicon Valley Bank, seems to be subsiding. The sharp falls in the prices of the main stock market indices in the world raised questions about how the Federal Reserve will follow its monetary policy. The sharp rise in interest rates had an impact on the financing of some companies and on the liquidity of the banking sector.

Find out more – I followed the price of the blue dollar, official, CCL and MEP in Argentina

On the New York Stock Exchange, for their part, the Papers of Argentine companies record the majority of increasesby the hand of YPF (+3.6%); Transportadora de Gas del Sur (+3.1%); and Vista Energy (+3%). On the other hand, the assets of Edenor (-4.2%) and Loma Negra (-1.4%) fell sharply.

Over the weekend, the former president Mauricio Macri He ratified that he will not be a presidential candidate in the next general elections, which forces the ruling party and the opposition to define their candidates and positions. “Without particularly bullish news, we believe that Mauricio Macri’s announcement may have triggered the electoral ‘trade’ again. It was very well received by the market, as it brought some clarity on the political front”said Portfolio Personal Investments (PPI).

The improvement in the market does not remove doubts about the future of the domestic economy, which is hit by rising inflation, high fiscal deficit and a long drought that affects exports and the reserves of the Central Bank (BCRA).

Genuine market needs forced the BCRA to part with some US$1,630 million so far in March and around US$2,690 million in 2023. “Comparing March with March of each year, this 2023 has been the worst in the daily average of liquidations since 2004. It falls 37% against the average (…) In this month (March) 1,071 million dollars have been deposited, a 64% drop compared to the same period in 2022,” said analyst Salvador Vitelli. “Operators continue to monitor the drain of foreign currency on a daily basis, and therefore the greater scarcity of net reserves, new measures on supply -such as the ‘soybean dollar 3’ (special dollar for exporters)- and demand are still expected – more restrictions on imports or diversion to another place-since the dynamics are not sustainable”, estimated Ber.

Bonds and country risk

For his part, sovereign bonds in dollars consolidate their rebound that began the day before after suffering five consecutive falls. The highest ascents are for Global 2029 (+4.3%), Global 2035 (+4.2%) and Global 2030 (+3.4%).

The bond market collapsed last week after the government announced an exchange of titles to which official entities must adhere to deliver dollarized holdings in exchange for other pesified ones.

So, the country risk measured by the JP.Morgan bank fell 0.8% to 2,475 points.

It is scheduled for this Wednesday a debt tender in pesos by the Treasury, where the maturities are mainly concentrated in the remainder of the “S31M3” series, almost entirely in private hands after the recent exchanges (around 90%). Is about maturities for 284,000 million pesos.