The Argentine Equity begins to offer more solid foundations, with expanding strategic sectors and a financial scenario that begins to align. The challenge will now be to hold the macro course.
The Argentine share market is going through a moment of renewed enthusiasm. The Merval Index once again exceeded the historical maximums achieved during the Macri era -in real terms -, driven by an improvement in the perception of country risk and the good performance of the energy sector. Part of this renewed trust is explained by the recent decision of Fitch Ratings to raise the sovereign credit rating of Argentina’s sovereign of ‘CC’ A ‘CCC+’which also led to improve the notes of Banco Santander, BBVA, Macro and Supervielle. The agency justified the change for a more stable macroeconomic environment and an expected credit recovery in 2025, supported by greater liquidity and a more predictable economic policy.
Behind the Equity rise, there is a key structural fact: 60% of the MERVAL is composed of companies in the energy sector, considered strategic for the future of the country. Argentina aims to diversify its currency generating matrix and stop depending exclusively on agriculture. In that sense, The energy sector – with Vaca Muerta, LNG projects and new investments in infrastructure – is consolidated as the main engine to accumulate reserves and sustain growth. Leading companies such as YPF and Pampa Energía reported solid results in the first quarter, highlighting investment plans and operational improvements that consolidate their position in the region.
Actions: the peculiarities of the banking sector
On the other hand, The banking sector is also presented as an attractive commitment, but with a caveat: it is highly correlated with the evolution of the local macro. Therefore, if one is optimistic with the current economic program and with greater stability of the sovereign debt, it can also be with banking actions, which function as a thermometer of the internal economic cycle.
Facing the future, we believe that It makes more strategic sense to weigh companies with ADRSsince these have a higher volume operated abroad, a key attribute if Argentina manages to be recategorized as an emerging market and continues the compression of the country risk. Among the actions with the best international liquidity profile are: YPF, Galicia, Macro, Pampa Energía and Vista Oil & Gas.
In conclusion, the Argentine Equity begins to offer more solid foundations, with expanding strategic sectors and a financial scenario that begins to align. The challenge will now be to hold the macro course and continue generating clear signs of predictability and discipline.
Guardian Capital
Source: Ambito
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