The search for coverage in the run-up to the elections generated a dollarization wave, even in equities in pesos, but after Sergio Massa came first in the elections there was a strong sell off and a renewed appetite for CER instruments.
October investments: what were the winners and losers of the month
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Strategy change. This is how October was experienced in the local market. The first part of the month, until the general elections were held, there was a strong tendency to seek coverage. Thus, most of the assets began a bullish rally that was cut off when Sergio Massa entered the runoff but in first place, instead of second, as expected. The best of the month: CER bonuseshighly sought after due to the expectation that inflation will remain high but due to the moderation in the projections of a new devaluation.
Variable income: stocks with a lot of volatility
The S&P Merval and Argentine stocks they flew 41.3% in pesos before the elections were held, but then almost all of that increase was erased and It accumulated only a 3% advance in the month. While the idea was held that Javier Milei could prevail in the elections, companies such as Aluar or Ternium, were the favorites of investors, since they have most of their assets dollarized. So, They recorded exponential increases in a very short time (up to 93% until October 17).
After Sergio Massa won, there was a strong correction. Thus, the selective accumulated an increase of only 2.95% throughout October and measured in dollars (CCL), it registered a monthly drop of 2.1% and ended at 669.66 points. In October, the stocks that rose the most were: Aluar (+23.1%); Mirgor (+18.4%); and Ternium (+15.1%). At the other extreme, the worst of the month were: Supervielle Group (-15.3%); YPF (-14.1%); and Edenor (-8.4%).
Fixed income: CER bonds are imposed in the month
Sovereign bonds register a significant monthly drop, with a negative yield on average of 15% in dollars. This “is partly explained by the electoral uncertainty still in force in Argentina, which will not have definitions until the runoff between Sergio Massa and Javier Milei on November 19,” said Maximiliano Donzelli, Head of Research at IOL investonline. The main decreases were for: the Global 2029 (-15.2%), the Bonar 2035 (-15.2%), and the Global 2030 (-14.6%).
Throughout the month, on the contrary, CER bonds had an average yield of 33% in pesos, with a little variation depending on the year of maturity. “They have recovered after the good result of the ruling party in the general elections has fear of dollarization of the economy removedwhich could have a negative impact on these instruments,” explained Donzelli. Thus, the papers that registered the greatest increases in the month were the TX28 (+33.4%), the PR13 (+28.4%), and the TX26 (+26.4%).
Regarding the dollar linked bonds, they advanced until 20.9% by the hand of TV24while the T2V4 went up twenty% in the month. They were strongly demanded in the run-up to the elections, given the fears of a new exchange rate jump if Javier Milei prevailed. In fact, subscriptions to this type of FCI strongly pressured the price upwards, which led to a complication for order management.
Source: Ambito
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