Amid sharp stock market declines and a lot of volatility throughout 2022, the behavior of Argentine stocks once again put the local market in the focus of Wall Street. The presence of foreign funds in recent weeks is related to this phenomenon and the numbers speak for themselves: The case of YPF with an increase of more than 90% in the share in dollars in little more than a month is an emblematic case, but the bank papers (which are the favorites to position themselves in local assets) accumulate an increase of 50% since their minima.
The big rally in stocks is not isolated. It also coincides with the greater stability of the exchange rate, which even fell a step yesterday. The most notable thing was that the MEP dollar was about to break through $280, while the sell-off ended below $290, when last week it had closed above $300.
The floor in the stock market prices was on July 20, just before it was confirmed to Serge Massa as Minister of Economy. From there the rebound was remarkable. The YPF ADR in New York jumped from USD 3 to almost USD 6, while bank papers such as the Macro rose from USD 10 to USD 15, to cite a couple of examples. Other cases were less notorious but still marked interesting increases, such as the case of Pampa Energía, which went from a minimum of USD 20 to exceed USD 25.
There was a visit by top portfolio managers in recent weeks to Buenos Aires which clearly resulted in actual purchases. Even with little volume of operations, it is enough to move a market that has few participants and that in recent years had lost all interest. These purchases, in addition to causing a strong stock jump, are also helping to keep the dollar at bay.
The arrival of Sergio Massa and the more orthodox shift in economic decision-making was well received by investors. New signs are now expected, which may emerge on the trip that the Minister of Economy will undertake to the United States next week
The “Massa effect” that was visible at the end of July managed to continue, based on some concrete signals from the Minister of Economy. The commitment to lower real spending, implement tariff segmentation and move forward with an exchange that made it possible to clear the horizon of maturities in pesos, at least for the remainder of 2022.
Everything generated relief and above all the certainty that the economy was moving away from the abyss, avoiding an uncontrolled devaluation. Now the expectation is set on specific measures for the field, which have the objective of accelerating the sale of the soybean harvest that is still kept in silobolsa and thus increasing reserves.
But without a doubt one of the measures with the greatest impact was the tightening of rates, which brought the effective yield that the Central Bank pays for the Leliq above 85%.also promoting an increase in rates by the Treasury in the last tender. This adjustment was not only read as an orthodox measure, but also helped to discourage the demand for foreign exchange after the sharp rise in the dollar in June and July.
Next week, moreover, will be Massa’s visit to Washington, where he will meet with international organizations and there will surely be at least one round of meetings with investors. This is a key tour to consolidate market expectations.
The clashes that took place between the Buenos Aires police and Kirchnerist demonstrators in Recoleta did not cause much noise in the markets.
The rebound in stocks also offers other possible readings. One of them is that the very low prices that had touched the papers triggered purchase orders taking advantage of the opportunity. But the possible political change related to next year’s elections is also beginning to be glimpsed. The famous “electoral trade” is not yet something consolidated, but clearly a possible change of political color is something that is beginning to be considered by the big funds.