Bonds vs Argentine stocks: which is the best investment option at the moment

The price of long-term Argentine debt in dollars in dollar bonds is at very low levels at the moment: around US$20 for each US$100 of par value. While the stock market has been rising recently and the S&P Merval, the leading index of the Argentine stock market, equates to around $700one of the highest levels it has reached since the fall it suffered with the 2019 primary elections. Although it is well below the record of US $ 1,800 of 2018, the rise so far this year was close to 100% and the contrast with the bond market is strong, so the dilemma between which of the two should be bet on settles in the City.

For the economist of Grupo Broda Elena Alonso, the stock market is rising and, although he sees it as very volatile, his opinion is that it is an interesting opportunity to diversify portfolio, since as the tendency to seek coverage in the electoral context could continue forward, it could be a time to bet there.

However, on the other hand, he also considers, in dialogue with Ambit, that “the rise registered can be a good opportunity to get out of the shares taking advantage of the escalation of the Merval and become dollarized.” One option could be bonds in dollars, dollar linked.

S&P Merval vs. risk country

And it is that Mauro Congnetta, financial analyst and executive director of Big River, points out that “all the Research studies of the main consultancies” agree that Stocks, measured in dollars, in relation to country risk, which is an index that measures the dynamics of bonds, are expensive in relative terms”.

He explains that this is because people seem to be trusting the private sector more than the public sector and that makes bonds certainly cheap right now, which seems to be a good starting point based on the analysis. of the two corresponding indices for the investor when investing.

And it is that, as the economist and director of CyT Asesores Económicos, Camilo Tiscornia, comments, taking into account the current values, if they were to be paid within the initially established terms, they would have a return that would be very difficult to obtain with any type of gold asset.

What the trend says in bonds

That is why some investors see that it is a time of opportunity to enter these assets and most of those that are being placed are CERs or dollar linked, but also LEDES or LELITES have very high yields with short terms. However, Tiscornia mentions that “what this low price of the bonds suggests is that they are discounting that there will be some type of restructuring going forward.”

Thus, it indicates that there is a clear risk of some kind of complication in the future. But, on the other hand, many believe that perhaps with a change of government, bonds could pick up and that could represent a chance to win big.

The issue is that the placements that the Government makes every month are becoming very complicated and there is fear that the bonds that may mature next year will enter a restructuring, as has been said, in a new government administration. However, many analysts do not rule out that, even in this context, they can also win.

In a similar vein, Cognetta considers that “stocks are cheap actually still in real terms”, so they are not an option to rule out, but the bonuses look much more interesting.

An interesting but very volatile asset

Thus, observe that, for someone with an experienced investor profile, without a doubt, it may be interesting to invest in bondsbecause we are at parity of 25% and what must be analyzed is the risk benefit.

“I believe that this relationship, at these prices, is in favor of the investor,” he sanctions. He warns, in this sense, that what you have to think about is what are the chances of a default or a restructuring, but the truth is that both possibilities are priced in today’s bond values.

However, for him, “the conclusion is that today is worth investing in bonds”, although he acknowledges that it is not an option for everyone, since there is high volatility, but the truth is that it is an interesting alternative because they are cheap in relative terms.