Markets face last week of November with the commitment of align your investment portfolios in the middle of a strong following wind with record prices due to the incentive of the fiscal surplus and commercial, plus the inflationary contraction and a exchange tranquility.
The economic policy implemented by President Javier Milei causes a firm revaluation in public and private securities for months now.
Milei has just set a strong geopolitical agenda by meeting in a few days with the American president Donald Trump, the French Emmanuel Macron, the Chinese Xi Jinping, the Indian Narendra Modi, the Italian Giorgia Meloni and the head of the International Monetary Fund (IMF), Kristalina Georgievaapart from group contacts within the G20 summit.
Dollar: the measures the market expects
“The gap between the wholesale dollar and the financial ones pierced 10%, a minimum since the ‘stocks’ (exchange control) returned in 2019. This not only attenuates the distorting effects of capital controls, but also provides an opportunity to eliminate the blend dollar and what remains of the COUNTRY tax without affecting the market too much“said economist Roberto Geretto, from the consulting firm Adcap.
A “The next step will be the compression of the exchange ratewhich is mutating from being an anchoring factor of nominality to being a factor of inertia, which induces inflation according to the economic authorities,” said the consulting firm EcoGo.
“The market continues with a positive trend (…) Looking forward, variables such as the central bank’s dollar purchases in the MULC (Single Free Exchange Market) and how the dynamics of private deposits in dollars continue with stage ‘1 will be closely followed. ‘of (money) laundering is now over,’ commented Juan Manuel Franco, chief economist of the SBS Group.
“Argentina is showing an increase in financial assets beyond the international context. This shows that the increase is due to its own attributes and not due to the herd effect in world markets,” said analyst Salvador Di Stefano. “If we continue on this virtuous path, it will not take us too long to get out of the ‘trap’, agree with the IMF and improve the rating of our market,” he added.
Long live the “carry trade”
“Exporters liquidate their dollars because the Government demonstrated that it will not devalue, So this helps reduce the gaps; There is also an incipient credit market due to the liquidity that banks have with money laundering,” explained a Bull Market Brokers agent. “Importers take advantage of the ‘carry trade’ to deal in pesos, bet on the rate and thus get more dollars when they need to buy them,” he added.
“The gains accumulated in recent months with stocks and bonds are very important, That is why it is recommended to take short-term profits when investments are smaller in order to take advantage of the crest of the wave,” commented a financial advisor from a local brokerage.
“The reduction in the monetary policy rate leaves a real rate of approximately 7.3%, in line with the CER (inflation) curve. At the margin, credit demand has been reducing its growth speed and given the outlook, it will remain the drop in inflation, The central bank would have a little more room to shore up credit via a new rate cut“said the Neix brokerage.
“A interest rate in pesos (3.5% monthly) exceeds the ‘crawling peg’ (2% monthly). This turned the ‘carry trade’ into the business of the moment, with returns of 20-25% annually,” said the Encuentro Foundation. “If the current account deficit grows or the elections generate uncertainty, the ‘carry’ could reverse and cause a strong blow to the exchange market in 2025,” he noted.
Source: Ambito
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