What we could consider something new is that the Economy Minister speaks openly about the need for a strong fiscal adjustment in the most bleeding wounds of the imbalance: tariff subsidies for public services, the staff of the States and the distribution and expansion of social plans.
what was announced by Serge Massa in its inaugural conference it was a compendium of guidelines with good intentions. However, that is insufficient. For a plan to be successful, two essential ingredients are needed: one, that it be credible; two, that he has political support.
In this line, both ingredients are in see. On the one hand, credibility implies taking substantive measures that attack the root of the problems, assuming the political costs of the case. On the other hand, assuming these costs necessarily implies that the leadership as a whole is willing to do so. What is clear is that there is no possible adjustment without pain.
In the middle, investors, with more uncertainty than certainty. Although the new minister is given the benefit of the doubt, reflected in the stability of the main financial variables in these weeks, time is running out.
In the tense calm of the market, radical political definitions are expected that could move the thermometer of confidence. Thus, what is most urgent are the definitions in exchange matters, the monetary disorder of the Central Bank and the pruning of subsidies to improve the profile of the fiscal imbalance.
The 5 investment options:
From the point of view of the investor, the first certainty that seems to be given in the short term is that inflation will beat you to the dollar. Thus, the CER-adjusted instruments they once again win a relevant place in preference within the menu. However, most of these indexed assets belong to the public sector, which adds a seasoning of risk due to the deterioration of investor confidence regarding this investor.
At the same time, dollar sovereign bonds they have rebounded from historic lows, more explained by opportunity purchases and a better external climate. Going forward, prices will be tied exclusively to the success of the concrete progress of the measures that solve the underlying problems.
Within the spectrum of Argentine financial assets, the private sector looks in better shape than its public counterpart, both in bonds and stocks. Not a minor part of the investors sought refuge in the Negotiable Obligations, taking the return premium offered to a level, in my opinion, scarce, for the macroeconomic maladjustment at the aggregate level. However, there are companies with an excellent track record that provide a robust sense of security for the investor who is not overly risk tolerant.
For those who are willing to expose themselves to risk, with a medium-term vision, domestic stocks look cheap. It is not for everyone, but there are companies whose market prices are very dissociated from their long-term value in a more normalized country environment. Our most heavily weighted sectors there are Oil & Gas and Industry.
Finally, there are options for those who do not want to expose themselves to the ups and downs of politics or the absence of substantive economic measures. The Cedears and corporate bonds investment grade abroad, are assets to consider.
As I always point out, the premise is: “Tell me what risk you are willing to take and I will tell you what you can invest in.”
Head of Research & Strategy at Inviu.