Despite exchange rate uncertainty and accelerating inflation, May was a good month for Argentine investorsespecially for those who bet on the stock market. The Buenos Aires Stock Exchange closed the fifth month of the year with an increase of almost 15% in pesos – the dollar including liquids rose by 8.7%- and racks up a 69.3% increase since the start of 2023. There have been Merval-listed stocks that are up more than 34% and general-panel stocks that are up more than 70% this month alone.
On the side of obligationsDespite mounting volatility, which is compounding as the mid-term elections approach, dollar fixed income instruments finished the month with yields above 10%.
After the exchange rate turmoil at the end of April. the dollar market was more “stable” in the fifth month of May. With the force of controls, raids, new obstacles to stocks, among other measures put in place in the last 30 days, Financial dollars ended up jumping in line with expected inflation: an 8.5% monthly increase for settled cash and 7.1% monthly for the MEP dollar.
While, The Central Bank has allowed the wholesale dollar to run at a monthly rate of 7.6%. the highest since August 2019.
Massimiliano Donzelli, of Investing Onlinehe said, “In another month of volatility in financial dollars and uncertainty as the presidential election approaches. Despite everything, May has been very positive for the local financial market.”
Donzelli highlighted: “In line with what happened in the previous months, Merval recorded a positive variation of 14% in May, reaching 340,000 units”. Also notable is the rise in the Merval when measured in dollars, at spot prices with settlement. In this case, the increase was 5.8% this month and has amassed a gain of more than 18% since the beginning of the year.
«Once again the levels reached by the index are striking, with a country risk close to 2,600 points. said analysts at PPI, who added that these days the market has experienced “a little more clarity on some of the fronts on which the economy minister is working to increase reserves in the BCRA could be the key to seeing one more push”.
All in all, the market is not optimistic about the future of Argentine companies’ cards. The sales season ended last week. In general terms, the flow cycle of Argentine companies is still stable, some of them maintain some growth, while making the economic slowdown evident,” they stressed in Delphos.
In the consultancy they warn: “However, we expect a reversal of the results and a negative passage of the balances for the second half of the year and the first half of next, due to a greater impact of the negative dynamics of the local economic activity markets.”
With some variations during the month, the country risk closed at around 2,555 points. “In May, dollar-denominated bonds closed with recoveries measured in pesos and also at parity, along the entire yield curve, with increases that averaged close to 14%” reported Tavelli and company.
Charles Arterburn is a seasoned business journalist for News Rebeat, where he provides comprehensive coverage of the latest trends and developments in the world of finance and economics.