After a bullish start (especially in the pre market, where Banco Macro climbed 5%), Argentine stocks closed with a majority of losses on Wall Street, led by Edenor (-4.7%); BBVA bank (-3.3%); Globant (-2.7%); Cresud (-1.7%); and Ternium (-1.7%). The increases, on the other hand, were led by Central Puerto (+ 4.9%); Free Market (+ 2.3%); and Telecom (+ 2.1%).
In the Buenos Aires stock market, meanwhile, the sharp decline in the unregulated financial dollar (about 4%), and some profit taking, conditioned the performance of BYMA’s leading S&P Merval index, which lost 2.1%, to 92,999.37 units, after marking an intraday historical maximum level of 97,024.42 points last week.
The most pronounced losses of the day were registered by the shares of Edenor (-5%); Transener (-4.2%); and YPF (-4.1%). Meanwhile, among the few ascents of the wheel, the papers of Cablevisión (+ 3.8%), and Central Puerto (+ 1.4%); and BYMA (+ 0.6%).
The volume traded in shares fell 3.3% to $ 2,346 million, representing about 45% of the total traded in equities (since the amount traded by the Cedears sank 44% to $ 2,835 million).
The local market had started the day in positive territory, with a rise of more than 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 mainly 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.
“These days, it is usual for there to be movements that start in one direction and end in another. At the opening, the market was somewhat positive, so it led many investors to take a position and in this sense, the index rose. Then the index rose. , quickly, the selling force ended up winning, which, basically, are those that came from the rally prior to the Elections“said José Ignacio Bano, Research Manager at IOL invertironline.
For his part, Rafael Di Giorno, director of Proficio Investment, commented to Ambit that intraday volatility was the result of “Many thought that the victory of the opposition would be broader in the general elections, but the ruling party managed to regain some ground, especially in the Province of Buenos Aires, with which they are still in the ring somehow.”
In the province of Buenos Aires, Together for Change obtained 39.8% of the votes compared to 38.5% of the ruling party. “The discount of points made by the Frente de Todos, especially in the Province of Buenos Aires, makes many consider that still in 2023, the debate on the succession is open”, reasoned another operator, beyond the fact that 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 (Peronism remains the first minority in the Lower House).
After the triumph of the Together for Change coalition by about 9 percentage points at the national level (42.38% versus 32.93%), 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).
Disputes within the ruling coalition also generated discontent among voters and added uncertainty to the economic and political future. In fact, The market still fears that the opposition’s victory will generate new risks between President Fernández and his vice president, Cristina Kirchner, although they hardly decide to break the government coalition, according to experts.
Country risk and bonds
Unlike stocks, Global dollar bonds had their best day since Monday post-STEP, something that was reflected in the Argentine Country Risk, which sank this Monday about 51 basis points (-2.5%) and pierced 1,700 units in response to the defeat of the ruling party in the midterm elections.
The indicator that the JP.Morgan bank measures was located at 1,683 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 2.4%, led by the GD35D, and seconded by the GD41D (+ 1.3%), and the GD30D (+ 0.8%), while the Bonares, on the contrary, recorded losses of up to 1.8% (AL41D).
The fixed income market in dollars considered that, after Sunday’s results, the ruling coalition should seek consensus with the opposition to leave behind a prolonged economic crisis, and should show a more moderate attitude. “A more market-friendly composition of Congress could lead to more effective checks and balances and ultimately a policy regime change in 2023.”said Alberto Ramos, an analyst at Goldman Sachs.
For the economist Fernando Marul, the impact of the electoral result on the market was “limited.” “The results were not so different from those expected. The loss of the quorum for the ruling party in the Senate and the signals that President Fernández gave regarding the negotiations with the IMF are behind the market reaction,” he said.
On the other hand, sovereign bonds in pesos dollar linked traded on offer and with little volume, closing at the lows of the day: they scored a average drop of 1.5%, with special punishment for TV22, which lost 2%.
On the other hand, great demand was observed in the bonds in pesos that adjust for CER (inflation): achieved increases of 1% on average, highlighting the middle section of the curve (TX26, TX28).
Source From: Ambito
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