The choice is key by the electoral and economic weight of the district, and is interpreted as a anticipation of what could happen in the legislative of October. Given the relevance that the electoral contest was acquired in PBA, and the possible impact on the prices of domestic financial assets, delineated Three scenarios and potential market responses to each of them.
Positive scenario: adjusted defeat of lla (for less than 2%)
An outcome in which the Front Freedom progresses (lla) is less than two percentage points of Homeland It would be interpreted as a favorable result for national ruling. This scenario would claim the government’s economic plan and improve the medium and long term perspectives. In addition, it would increase the probability of a good performance in October, renewing the political support of society.
We believe that market reading would be that the economic plan maintains sufficient political support to face structural reforms and project an eventual return to volunteer debt markets. The social support would reinforce confidence until October, reducing pressure on the main economic and financial variables.
In this scenario, the most attractive assets are those linked to “Macro-Trade” medium and long term. The convergence of the Argentine sovereign curve to its comparable of similar credit quality, where Global They look like the main winners. Within them we identify value in the long curve sectionhighlighting al GD35 and GD41 Like the most attractive options.
In the same way, the accumulated correction in the Variable rent This year would leave space for a rebound, especially in the energy sector and banks.
Finally, given the current level of prices and fees, the Long -term fixed Cer and Fixed Rate It offers value opportunities in the face of significant compression of yields in this scenario.
Neutral scenario: moderate llala defeat (between 2% and 5%)
If the difference in favor of the opposition is between two and five points, a continuity scenario could be consolidated until October. In this case, the government would try to sustain the Disflation path with exchange stabilitymaintaining a discretionary and less predictable monetary policy, which would maintain an environment of Very high real ratesbut with less political margin. A possible increase in discretion and in regulatory changes could affect the credibility of the government program, where the policy maker loses degrees of freedom to guide the expectations of the various economic agents and investors.
This raises a challenging political dynamic, where the greatest uncertainty could bring greater exchange volatility Before greater coverage by the October face investors and a negative impact on the activity level, in a context in which current rates continue over time.
To give a scenario as described, with a real exchange rate more depreciatedvolatile interest rates and higher real yields, reinforce our vision of favoring positions in the Short section of the Lecaps curvewhere we consider that the risk-return binomial is more favorable to the October elections.
Those who have less risk aversion, and wish to stretch “duration”, we see opportunity in the Middle section bonds with expiration in 2026 and 2027 that offer attractive real yields.
Those investors who wish to position themselves in dollars or seek coverage on the exchange rate with shorter horizons and lower risk aversion, prioritize positions in Bopreal 2027, and Linked dollar bonds with yields between the 9% -10%.
Negative scenario: Amplia de lla defeat (for more than 5%)
A difference greater than five points would mark an adverse political scenario for the ruling party. The market could interpret a defeat of that caliber as a weakening of the ability to sustain the economic direction and increase the pressure on the prices of local assets. The probability of a reactive turn in monetary and exchange policy. In this case, the defensive strategy would go through prioritize liquidity in dollars and minimize exposure to local assetswaiting for greater clarity on the economic and political direction.
Conclusion
The Buenos Aires choice of September 7 is emerging as a political testing for the government and a thermometer of economic expectations. An adjusted result would give air to the ruling party and improve the medium -term perspectives. A moderate defeat would suspend the definitions, with a more selective market in its decisions. A broad defeat, on the other hand, could alter the political and financial climate, forcing to emphasize strategies on the eve of the October legislatures.
Head of Research of Criteria
Source: Ambito
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