Javier Timerman: “Massa is going to recover his image from a few years ago, which the market liked”

This market expert, who confesses to being a less risky investor when it comes to putting together his investment portfolio than he was a few years ago, partly due to the passage of time, which made him more cautious, qualifies the electoral result as “quite unexpected, especially for the market”. Given that, although there were some polls that had been reflecting that Sergio Massa was rising in voting intention, such a wide difference in his favor was not expected.

Likewise, he warns that We must be cautious when analyzing the post-electoral dynamics given that “the day after an election, generally, many speculative positions are closed.” And he also considers that “we are in an international context that is not very good“, since it is very complicated at a global level, with inflation that does not go down and with risks of recession for the United States economy, with rates that are expected to remain high for a fairly long time.

Meanwhile, at the local level, he sees the Negotiable Obligations in dollars of the energy sector, “particularly in the shorter YPF bonds, with maturities between 2024 and 2026.” This is because it anticipates that this industry is key to the normalization of the Argentine macroeconomy and that it is a sector where relevant investments in the real economy are currently seen.

However, he anticipates that The imprint that Massa gives to an eventual government that he heads will be key and he does not rule out that he could show “an image more similar to the one it gave a few years ago, which the market liked.” Timerman analyzed all this and more in this interview with our media.

Journalist: How do you see the result of the elections regarding the markets? What reading do investors do?

Javier Timerman: Although there were some surveys that had been reflecting that Sergio Massa was rising in voting intention and, although the market discounted a runoff between him and Milei, such a wide difference in votes in favor of the former was not expected. Clearly, the result was a surprise and investors reacted to that, but, from my point of view, it makes no sense to analyze what happened so far, in the first hours, because The day after an election, many speculative positions are generally closed. Also because I consider that the longest positions today need to be studied and we are also in an international context that is not very good.

Q: Do you think Argentina’s problem is economic, political or both?

JT: I have been saying for a long time that The country’s main problem is not economic. I think Argentina is still in prehistory: we have to debate our political model as a country because it lost a lot of reputation. We must work on long-term State policies and it is seen that the leaders do not understand that because they dedicate themselves, in general, to searching for and attacking or exterminating the adversary. I believe that Argentina should not take the path of total confrontation to get out of the crisis. We must show the world that we know and can work together. I think, for example, that many of Together for Change will understand this now.

Q: How is the investment scenario going ahead of the runoff?

JT: Now we have to wait and see what Together for Change is going to do with its votes, how the political forces are rearranged, if Milei and Massa come out to capture the center. Above all, What the market and investors are going to expect are the names of the Economy Ministers and the proposals of the candidates. There, when the market thinks that this period of uncertainty is about to end, I think it will begin to react better than what we saw today.

Q.: How do foreign and local investors see the candidate Massa and Milei?

JT: Abroad, there is a tiredness, a satiety, with respect to Argentina that will last until Massa presents a differentiating plan from what he has been doing until now because he is the ruling party’s Minister of Economy. For example, I consider that Dal Poggeto has more chances of being the head of the Dal Poggeto Marine Economy than Fernanda Vallejos., but the market cannot see it today. Investors have suffered many disappointments with the country, several rule changes on the fly, and that is why they are a little skeptical about Argentina.

As to Milei, is a candidate that generates a lot of uncertainty because he has very disruptive proposals and it does not have management or a solid team. He is not a candidate that the market likes, which is why he reacted negatively the day he won the PASO. On the other hand, Sergio Massa until a few years ago was “the pretty girl on the market”, but we have to combine that with the fatigue that exists outside with Argentina.

However, Massa continued to cultivate his relationship with the international market during all these years, until it was his turn to reach the Ministry of Economy. But after his speech last night and inferring that he is going to go in search of the voters of the center, I think that, between now and November 19, he is going to show an image more similar to the one he gave a few years ago, the Massa who gave him the market liked it.

Q: Which assets become attractive after the election result and which lose it?

JT: With Sunday’s result, we believe that All assets that had risen sharply due to the risk of dollarization that was perceived as imminent now have to fall due to the fall in that risk.. That applies to the CCL, the future dollar, dollar-linked bonds and even many stocks that have risen sharply in recent times as a refuge for a flight from the peso. On the other hand, titles that adjust for CER should fare better. Thinking in more strategic and risk reduction terms, we maintain our recommendation for dual bonds that mature in April 2024 because they allow us to be protected from inflation and devaluation. In turn, we see that sovereign bonds in dollars are making a floor, after a very strong initial correction.

In our opinion, The runoff will force the two candidates to moderate and go in search of the vote of Together for Change (JXC). Outside of the most expected displacements, such as the voter of the Radical Civic Union (UCR), closest to Massa, or that of Macri, more affectionate to Milei, a less ideologized one will remain in the middle. Taking into account the high rejection exhibited by both contenders, the runoff will be won by the one who generates the least fear in that group. This will translate into market-friendly messages from both sides: the libertarian will be more constructive, seeking consensus and getting closer to the JXC teams, while the current Minister of Economy will be able to begin to differentiate himself from the current administration.