Wednesday, December 8

Strong post-electoral punishment for Argentine ADRs: they sank up to 20% in the week

This Friday, in addition, Fears of a Covid-19 outbreak in Europe hit the markets of the Old Continent, and this affected many emerging assets.

All in all, the strong weekly declines in Argentine papers on Wall Street were led by the financial sector: BBVA bank sank 19.8%; Grupo Financiero Galicia, -16.8%; Grupo Supervielle -16.7%, and Banco Macro, -13.9%. In addition, Central Puerto lost 16.6%; Transportadora de Gas del Sur, 11.6%; Cresud, 11.1%; and IRSA, 11%.

In the last day of the week, the casualties were led by Telecom (-9.3%); Central Puerto (-8.6%); and IRSA (-7%).

These strong setbacks conditioned the BYMA S&P Merval index, which had started the day on Friday higher, but quickly erased the rises, to operate with a strongly negative tone for most of the day. At the closure, lost 4.3% to 85,695.15 units, after bouncing 2.3% in the previous session.

Thus, the leading panel accumulated a drop of 9.8% in the five wheels of the week, that is, the worst performance in pesos since the end of October 2020. Measured in dollars, it sharply cut all the increase achieved in the last month and returned to levels prior to PASO, by falling 10.2% (measured with the average CCL of ADRs).

The setbacks of the day in the Buenos Aires stock market were led by the shares of Aluar (-5.4%); BBVA bank (-5.4%); and Transportadora de Gas del Sur (-5.2%).

On the other hand, during the week the worst performances were registered by Central Puerto (-16.4%); Grupo Financiero Galicia (-15.6%); and bank BBVA (-15.7%); Macro bank (-13.3%); and Edenor (-13.2%).

The volume traded in shares was decreasing throughout the days, with $ 2,346 million registered on Monday and this Friday just $ 1,573 million, the lowest number of the week.

“It gave the sensation that the market lost a good part of the optimistic expectations that it had been offering since the beginning of the month and was supported by the doubts that remain in the face of the variety of post-election scenarios, with a volatility in the prices that continues to be a protagonist of the scene“, said Javier Rava, director of Rava Bursatil.

After knowing the electoral result, the president Alberto Fernández said that “in the first week of December we will send a bill that specifies the multi-year economic program” within the framework of a lengthy debt negotiation with the Fund.

Doubts about the near future of the economy were reflected in a sharp drop in share prices, a high country risk and a persistent dollarization of portfolios that pressured the exchange market. The BCRA maintained its selling position this week. This Friday he lost another $ 60 million. accumulating in the week a negative balance of US $ 117 million.

“The negative sentiment in the local market persists. The macro challenges to be faced in the coming months are not minor”said an agent. Added that “The pressures in the exchange rate and the disorder in the monetary field demand economic measures and until such time as an economic path is defined that orders the macro, it is difficult to begin to see a sustained change in the trend in prices.”

From Personal Portfolio, in turn, they remarked that “The electoral result increased optimism for 2023 and defined a new political map within Congress with power distributed among the different political forces. However, the political and economic uncertainty did not dissipate.”

In the fixed income segment, dollar bonds closed with the majority of gains, after a start with general losses. The biggest rises of the day were recorded by Global 2038 (+ 5%); and the Global 2030 (+ 0.5%).

In this way, and unlike the shares, in the weekly balance the Globals showed practically no changes, since Monday’s gains were diluted with the passing of the days.

In any case, the drops were important in bonds under local legislation: the benchmark AL30D presented strong declines: it pierced historical lows of US $ 33.35 and set negative records on three wheels in a row until this Friday, the day it seems to have found a floor in the u $ s31. The day ended at US $ 31.40 with a recovery of 0.6%.

In this framework, the Country Risk -prepared by the JP Morgan bank-, it rose one unit, to 1,741 basis points, after renewing its historical maximum (since the debt swap in 2020) of 1,761 units intraday.

For its part, dollar linked bonds in pesos fell 1% on average, accumulating average losses of 3.5% during the week, the most affected being Q2V2 (it yielded almost -4%).

While, titles with CER adjustment rose to 1.5% (TX28), for what they accumulated in the week increases of 2% average in the short / medium section and 5% in the long section (the Discoint climbed 5.5%).

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