“Inflation has moderated, but it is still high,” the Fed said in its report. “The Committee will be prepared to adjust its monetary policy stance when it deems appropriate if risks emerge that may prevent the achievement of the Committee’s objectives,” he added.
For the analysts consulted, this Byzantine scenario suggests complicated conditions for emerging markets, such as Argentina, especially for investors who must define the destination of their portfolios.
Put to think about the Argentine variable income market, Diego Martínez Burzaco, Head of Research Inviu; Gustavo Neffa, partner and director of Research for Traders; and Agustín González Capdevila, an analyst at Investing in the Stock Market (IEB), presented their strategies for this historic moment and chose one or two sectors that could stand out locally in the aforementioned situation. At the start, the fact that cannot be ignored is that both the financial sector, as well as the energy sector, come from having advances in January of 27.2% and 13.8% in dollars, respectively.
Energy: oil and gas
In the first place, Martínez Burzaco pointed out that, although it must be analyzed how far the increases in the interest rate by the FED could go, a positive fact is that, for some weeks, the members of the board of directors of the monetary entity they have decided to apply smaller and smaller increments. “The expected slowdown is going to be positive for the Argentine markets,” he said.
On the other hand, Burzaco suggests that The strong recovery experienced towards the end of 2022 in Argentine shares could continue to be seen in the coming months based on a change in expectations.. Related to the latter, the analyst maintains that it is very important to weigh the drivers that the evolution of the political contest is “leaving”, that is, which candidates begin to have a greater possibility in the domestic electoral scenario for this 2023.
Burzaco said that the energy sector is one of the most attractive. He bases this opinion on the fact that although they have had an upward course, they could extend it over time thanks to the fact that they are “attractive to medium-term portfolios” assets.
According to the head of research of the financial advisory platform Inviu, companies such as Vista, YPF, Transportadora de Gas del Sur (TGS), and Transportadora de Gas del Norte (TGN) they are the chosen ones. At the same time, Martínez Burzaco recommends within the sector to Pampa Energía (PAMP) and Central Puerto (CEPU)which “may be good names to have” in the investment portfolio.
In this same line, for the research team of the firm Balanz, the energy sector extended the increases that it has been accumulating from previous months, driven by a favorable international scenario but also a local element. “The energy sector found a conducive local environment to support increases, with crude oil production reaching an 11-year high.
The outlook is equally optimistic for 2023 given the advancement of exploitation projects in Vaca Muerta,” Balanz said in his weekly report. Similarly, IEB is positioned mainly in energy with the aforementioned companies emphasizing Transener’s performance for the month of January (39%), YPF (33%), Transportadora de Gas del Norte (15%), Pampa Energía (9%), and Central Puerto (7%).
On the other hand, Agustín González Capdevila, from IEB, recommended the banking sector in his report taking into account the path shown in January. He Galician Financial Group (GGAL)for example, yielded 46%, Macro Bank (BMA), 42%, while the Merval paid 22%. “After the “repricing” of Argentine assets and their subsequent adjustment, the Argentine equity market entered a phase of high volatility. In the short term, we believe that this volatility is more than justified given the rally that the index has had in 2022; particularly from July to mid-January of this year,” IEB noted in its report.
“In this context we still believe that there is immense potential; current levels are 185% away from the 2,000-point high touched by the S&P Merval measured in USD and adjusted for US inflation in 2018,” he added. From Balanz they also highlighted the banking sector that was “lagging behind” in 2022.
Among the papers they maintain that Banco Macro, Grupo Galicia and Supervielle, among others, should be part of a portfolio. As pointed out by IEB, “the upside of Argentine equity is enormous, and for those long-term investors (at least after the change of government) each adjustment can present a good opportunity to strengthen their position in companies that we consider attractive.”
On the other hand, Gustavo Neffa has recommended within the industrial sector, companies Ternium Argentina (TXAR) and Aluar (ALUA). He points out that they are “relatively not very volatile and have a good cash flow in the US”. Although he maintained that it “plays against the slowdown cycle in the world’s largest economy,” he said that the latest indicators that were known “show that it could avoid the recession,” which transforms it, in the analyst’s opinion, into A good sector to focus the bets.
Related to the latter, from Balanz they maintained that the strong boost that emerging markets received after the news of reopening in China and the improvement in the prospects for activity in developed markets were combined with lagged valuations of local assets. This could constitute an argument to prop up shares of companies such as TXAR, which jumped 21% in January, and ALUA, which gained 16% in that period.
“Since the inauguration of Sergio Massa as Economy Minister, the government has shown a more pragmatic approach in resolving macro tensions, where some have achieved their goal, which eased concerns about a radicalization of economic policy. In addition, a complex election year from an economic point of view, could leave room for potential more pragmatic economic policies post 2023, which could have given additional support to local assets,” they added in their report.
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