After a bullish start, Argentine stocks were trading with a majority of losses this Monday on Wall Street. In the first part of the day, the papers of Argentine companies recorded drops of up to 2.3%, led by the BBVA bank. In addition, Loma Negra lost 1.9%; Grupo Galicia fell 1.7%; and Cresud 1.7%.
In the Buenos Aires stock market, meanwhile, BYMA’s leading S&P Merval index lost 1.8% to 93,228 units, after marking an intraday historical maximum level of 97,024.42 points last week.
The local market had started the day in positive territory, with a rise just above 1%, since in the pre market the ADRs showed moderate increases, and even some decreases. But with the opening of Wall Street, at 11:30, investors opted for sales in the US, something that was transferred to the local market. “It’s a picture of what happened after the STEP. When the trend starts up, the short profit takes appear”, reasoned an operator.
For his part, Rafael Di Giorno, director of Proficio Investment, commented to Ambit that intraday volatility is the product of “Many thought that the victory of the opposition was going to be broader in the generals, but that not only did not happen, but the ruling party recovered three points in PBA, with which they are still in the ring somehow.”
After the triumph of the Together for Change coalition by almost 9 percentage points at the national level, andhe President Alberto Fernández said that in December he will send an economic plan to Congress to reach a consensus with the opposition. In addition, the president indicated that he will seek to order public accounts and agree with the IMF.
“We need the great majorities to generate consensus. In that sense, as soon as possible, I am going to address the representatives of the popular will and the political forces they represent to agree on an agenda as shared as possible”, Fernández indicated.
Beyond these statements, the market expects more definitions. With the ratification of the Minister of Economy Martin Guzman and the announcement of the sending of a bill that sets the goals in the economic plane, Investors are carefully awaiting how the Government will seek to negotiate to find the minimum consensus in order to stabilize the economy.
“The Government must calm the markets, communicating a more orderly fiscal and monetary policy. A stabilization plan is needed”said Rodrigo Álvarez, economist and financial consultant.
Experts consider, however, that the result of the elections it had already been largely assimilated by the markets after the defeat suffered by the ruling party in the legislative primaries in September, which were a kind of advance of the elections on Sunday, although for a lesser difference.
After losing control of the Senate, the ruling party needs Congress to soon discuss economic reforms and an eventual agreement to renegotiate a debt of 45,000 million dollars with the International Monetary Fund (IMF).
In the province of Buenos Aires, Together for Change obtained 39.8% of the votes compared to 38.5% of the ruling party. The opposition also prevailed in provinces such as Córdoba, Santa Fe, Chubut and La Pampa, which left Peronism without the control of the Senate after almost 40 years. In the Lower House, where the ruling party has the largest bloc but not the majority, the balance of forces was maintained.
Disputes within the ruling coalition also generated discontent among voters and added uncertainty to the economic and political future of the nation, whose currency suffered a deep drop in recent days in alternative markets. Of heho, The market still fears that the opposition’s victory will generate new risks between President Fernández and his vice president, Cristina Kirhner, although they hardly decide to break the government coalition, according to experts.
Country risk and bonds
The Argentine Country Risk fell about 37 basis points this Monday and pierced 1,700 units in response to the defeat of the ruling party in the mid-term elections that were held on Sunday.
The indicator that the JP.Morgan bank measures was located at 1,697 units – minimum since the end of October-, compared to a maximum level of 1,753 points recorded last week and the 1,083 registered on September 10, 2020 when the debt was restructured with a millionaire swap with private creditors.
In this frame, Global bonds in dollars showed increases of up to 2.8%, led by GD41D, and seconded by GD25D (+ 1.4%), while the Bonares recorded losses of up to 1.6% (AL35D).
Following Sunday’s results, the ruling coalition will have to seek consensus with the opposition to leave behind a prolonged economic crisis.
“A more market-friendly composition of Congress could lead to more effective checks and balances and ultimately policy regime change in 2023, but there is also the risk of more populist policies in the short term.”said Alberto Ramos, an analyst at Goldman Sachs.
Source From: Ambito
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