A report of JP Morgan analyzes the best opportunities in stocks for investors in Argentina and points out that the Consumer Price Index (CPI) for December was 25.5% and showed an inflation of 211% year-on-year, the highest figure since March 1990, while on the other hand President Javier Milei reached a agreement with the Monetary Fund (IMF) regarding the debt program and will receive US$4.7 billion before the end of the month. In that context, What are the forecasts of the largest bank in the United States and what do you recommend investing in?
“Our forecast for the Real Gross Product (GDP) in 2024 is -3% and inflation is expected to be 210% in the yearwhich presents a relevant operational challenge for companies,” the report warns. They highlight that the two main news stories this week show the two forces colliding in the market: the market-friendly economic adjustments versus the challenging short-term macro scenario.
JP Morgan notes that Milei’s agenda still has high implementation challenges and prospects for the economyat least in the short term, as we know, they are going to be tough.
And they point out that, Taking into account the rebound we saw last year, we believe that current valuations, at more than 13x P/E, already incorporate a relevant reduction in perceived risk.
Thus, “in the context of a cautious view, We prefer exposure to the Energy sector, with relative preference for YPF over Pampa“, they point out.
Energy
In the Energy sector, the bank’s analysts improved the ratings of YPF and Pampa to Neutral in December, reflecting lower country risk and discount rates. Furthermore, the devaluation of the peso is likely to benefit oil companies, which have revenues tied to the dollar and a relevant share of costs denominated in pesos. “This continues to be our preferred sector to gain exposure to Argentina, despite remaining cautious in general in the country,” they indicate.
Banks
“The reading is less positive, since gains from exchange rate depreciation would likely be offset by the negative effect of higher inflation in 2024“, they warn. And they point out that the Finance team remains in three banks: Banco Macro, Grupo Financiero Galicia and Banco Supervielle.
Telecommunications
In this area, JP Morgan hopes that “the current scenario should have a negative impact on Telecom’s leverage Argentina, due to its debt in dollars, while they consider that the shares are trading at high valuations in relation to the sector in Latin America.
Source: Ambito
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