Dollar, inflation, bonds and stocks: what the financial gurus think about what’s coming

He dollar is it expensive or is it cheap? What panorama do foreign investors see about Argentina? What is expected for the dollar bonds and stocks? What are the expectations for 2024? These are some of the questions that the panel sought to answer. “Local and international macro vision” in the framework of the EXPOEFI 2023.

The guests on this occasion were economists Miguel Kiguel, director of Econviews, the economist and financial analyst, Xavier Timerman, Managing Partner of AdCap and Diego Martinez Burzaco, country manager of Argentina at Inviu. There, each one was in charge of developing their perspective on the key points to look at the Argentine economy in perspective.

Dollar and inflation: where we are and where we are going

kiguel He began his presentation with a harsh diagnosis: “Argentina is once again experiencing a chronic crisis.” With this state of affairs, the economist analyzed the devaluation carried out by the Government one day after the result of the STEP was known.

“The devaluation had an important effect on the inflation and in the dollar creating a lot of uncertainty. The idea was to stabilize to get to the elections with less inflation, but the government backfired,” he remarked. “I think the decision was closely linked to the IMF, which asked the government to make the adjustments beforehand. Do a devaluation without program is suicidal”, he sentenced.

Moving forward, Kiguel pointed out that to lower the currency gap it is necessary other exchange adjustment. However, he clarified that “if it is done in the same way as this one, or the one in 2014, the risk of things going awry is very great.”

Evaluating the three candidates with the most chances of reaching the Presidency, the analyst assured that what will define the winner will have to do with the team he has, the execution capacity, the political capacity and the capacity for social support. . “It is not only necessary to have ideas, to have teams, but to have political agreements”, he sentenced.

Regarding the possible proposals that are in the public debate, the Director of Econviews assured that neither the stocks “It can be taken from one day to the next” nor is it “eaten” with dollarization. Finally, he left a phrase that economists usually say after December: “You have to spend the summer”, alluding to January and February, waiting for the liquidation of the harvest.

How does Argentina see the foreign investor?

The proximity to investors from different parts of the world and his experience in the United States allowed him to Timerman a better understanding of the opinion of the foreign investors in relation to a country like Argentina and more with a possible change of direction. In this sense, he pointed out that Argentina, beyond its deep economic problems, has serious problems in the political framework and opined that this conspires with the arrival of investments.

“Investors see this lack of political coherence. What we are trying to do is to understand if the execution of these programs are feasible or not. I believe that the main problem in Argentina, and nobody is talking about it, is if politically viable the things that the candidates raise. The approach that is being given is an economic approach to problems that are not economic, they are political”, questioned.

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“Investors don’t run away from Argentina because we have problems, these are always opportunities. We are not seeing that foreign funds are looking at Argentina because they do not see a horizonwhich is a consistent policy.”

“Today foreign investors ask you: what will Argentina be like in five or ten years? and we don’t know, ”she asserted with concern.

Dollar and investments: the macro panorama 2024

Burzaco was in charge of closing the exhibition and was more optimistic that The external panorama will bring a certain “tail wind” for Argentina in 2024, highlighting the following points:

• Disinflation worked in the US.
• The worst of the rate adjustment ended in the core countries.
• India begins to displace China in global dominance.
• dollar in the stable world, favors commodities and emerging markets.

In this context, he recommends a portfolio that makes bonds more attractive than stocks. “Today we are seeing that the risk-return relationship favors investing in bonds more than investing in stocks. From the point of view of the global economy and of Argentina, to do business, 2024 should not be a bad scenario”.

And the local economy in 2024?

At this point, for Burzaco “the adjustment has just begun” and he predicted recessive months and high inflation. In that, he agreed with Kiguel that the inflation “found a new level” and acceleration is not ruled out until the end of the year.

In a debate with his colleague from Econviews, he added that the local markets they are currently anticipating a next government in December. “They know that there will be an increase in rates and a rise in the exchange rate” at the same time that he affirmed that today most of the prices are at the MEP exchange rate.

Burzaco took the kick from his colleague to give his forecast on the following points:

• There will be increasing pressures on the official exchange rate. For the analyst, this dollar of around $780 for Cash with Settlement or CCL responds to a “overshooting”.
• The transition and stabilization, the risk-return ratio favors the bonds, but it does not imply being exempt from turbulence. He also recommended instruments that protect against the official exchange rate.

“If Argentina begins to walk towards a normal country model, one could expect that in 2024, the official exchange rate will beat the free exchange rate, that is, the gap would close from the floor and not from the ceiling and the acceleration inflationary continue. He dollar is high but we cannot rule out a new overshoot today”, he concluded.