Again, Argentine stocks contrasted with Wall Street and once once more they did so in a positive wayas has been happening throughout a black May for stock markets globally. Yesterday the increases were concentrated mainly in the banks listed in New York (such as Galicia, Frances and Macro), with increases of more than 3%,while the technology stock indices, grouped in the Nasdaq index, lost almost 2.5%.
The contrast is much stronger when analyzing what happened throughout this month. US stocks deepened their fall: the Nasdaq has already lost no less than 10%, while the Dow Jones, which brings together the 30 leading companies, falls 3.1%. But the situation is very different in the case of Argentine papers. Banco Macro leads the increases with a gain of 10.6% in dollars, BBVA Francés gains 6.4% and Galicia presents a weaker result but still remains 3% higher in the month.
It is no coincidence that bank shares are leading the rises, not including energy companies such as Vista or Pampa, which are benefiting from the strong increases that occurred following the Russian invasion of Ukraine. These are the most liquid papers and therefore they are the ones that allow entry to the local market in the easiest way.
At this point, it cannot be considered an isolated or punctual episode. The recovery of the local market is already a firm trend, especially considering the collapse that Wall Street is suffering, the worst since the 2008 crisis. Surprisingly for many, Argentine assets are functioning as a refuge in the midst of a climate of strong pessimism for global investors. The main explanation is that investors are already beginning to look closely at what might happen in the 2023 presidential election.
A possible change of political sign excites the markets and Argentine stocks are slowly being incorporated into the portfolios, something that has not happened since the price crash of August 2019, just following the PASO that Alberto Fernández won. Two months later he would consecrate himself President in the formula together with Cristina Kirchner.
Investors are beginning to carefully observe the possibility of a political change in Argentina in the 2023 presidential elections. Bank shares are the main gateway for those who want to enter the market, due to their ample liquidity in New York
Now the opposite path is beginning to be traveled, perhaps with the memory of what was the great bull market that Argentina experienced between 2013 and 2015when Mauricio Macri became president.
Now the rise looks much more limited for several reasons. The international context looks much more complicated than at that time and in itself complicates the recovery. In addition, the problems that the government that takes office at the end of next year will face are substantially greater than eight years ago. Inflation flies, debt in pesos and dollars too, but also the drop in purchasing power and social deterioration accelerated.
The improvement in Argentine stocks was not accompanied, however, by the local bond market, with country risk remaining comfortably above 1,900 basis points.
The reason why the titles do not follow this trend has to do precisely with the fears of what might happen following the presidential change. Investors are already discounting that a new restructuring of the debt in dollars is coming in 2025, given the weight of the maturities of the renegotiated debt in 2020. However, at less than USD 30, Argentine bonds remain at “bargain” prices and might recover significantly once the market mood improves.
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