JP Morgan decided to overweight Argentina in the EMBIGD portfolio given the better prospects they believe the country will have in the short term.
From the Global Emerging Markets Research of the JP Morgan They decided that Argentina be overweight in EMBIGD portfolio (Emerging Markets Bond Index Global Diversified – Global Diversified Emerging Markets Bond Index), given the better prospects they believe the country will have in the short term.
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“Now we are more willing to assume positive scenarios for policy implementationamidst a resilient payment capacity at least until 2025. This vision is reinforced by a context defined by a more favorable global outlook for risk assets and solid public support for Milei,” they specified from the entity.
In this regard, they assured that they have a “constructive vision” about countries in difficulty in the region such as Argentina, Ecuador, El Salvador. In this regard, they decided to “overweight” Argentina and Brazil while giving an underweight to Paraguay and remaining neutral in El Salvador.
What view does JP Morgan have regarding Argentina?
For this entity, the markets reacted positively to the stabilization efforts of the Javier Milei administration. “The country meets Ecuador as the countries with best performance within the EMBIGD to date as positive idiosyncratic events have been met with a marked convergence bringing Argentina’s risk premium closer to its relevant peers within emerging markets,” they highlighted.
For JP Morgan “The most critical thing is the elimination of capital and currency controls”which implies exchange rate unification. However, we are now more willing to “accept bullish scenarios” for policy implementation amid resilient payment capacity at least until 2025, a view that is reinforced by a more benign global outlook for risk assets and public support “still solid for Milei”.
More specifically, they believe that Argentina “can take advantage of a window of opportunity that the next two quarters represent countries by reunifying the currency market and lifting capital controls”as they said “the key” for the other remaining pieces to bear fruit after a “successful adjustment” and even. “If these steps are delayed until after the October elections, we believe there are still ways to move forward,” they explained.
Source: Ambito
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