The regime change that the Argentine economy is experiencing leads investors to take extreme precautions when it comes to protecting their savings.
Amid the escalating economic crisis, 2023 left good opportunities for those who dared to bet on bonds and stocks. While the increase in inflation was around 200%, the official dollar increased by 356%, the peso devalued by 78% over the year and alternative dollars increased between 180% and 196% . On the other hand, the Merval is blown by 356% in pesos and 62% in dollars.
“In 2023, the vast majority of Argentine company shares available on the capital market far outperformed fixed maturity, which, during 2023, offered a profitability of 150% in pesos“, underlined by Invertironline (IOL). With the lowering of tariffs ordered by the new government, Fixed terms in pesos are no longer a viable option.
2024 opens with a high dollar, rising inflation and negative real rates, leading savers to flee from the peso in a climate of liquefaction of local currency placements.
In this context, Adcap recommends investors to turn in particular to the sovereign and sub-sovereign bond market to those that adjust for inflation or exchange rate changes. “CERs represent a good hedge against expected high inflation levels, especially those with maturities in the second half and in 2025 and 2026, as well as generating attractive short-term dollar returns.”
“Given that the market will start to price in an exchange rate rise in the first quarter, as the real exchange rate loses ground to inflation, we welcome dual positions due to their double hedging,” they point out.
In this sense, strong dollar sovereign bonds continue to look attractive with little (low) downside probability. Among sub-sovereigns we prefer provinces with royalties or fiscal surplus (Chubut, Neuquén, CABA and Córdoba), immunized against possible fiscal consolidation. of the Nation”.
In the Adcap stock market they see opportunities in some sectors. “Javier Milei’s macroeconomic proposals could have a positive impact on key sectors like that Oil and gas, agriculture and renewable energy production. These sectors could benefit, while non-renewable energy production, utilities, telecommunications and retail could be more vulnerable to economic challenges such as devaluations, recession and loss of purchasing power due to inflation,” they say.
In the Oil & Gas sector, The most recommended stock is YPF. “It is a solid option, as it has manageable deadlines and easy access to local financing,” says Adcap. Additionally, they highlight Aeropuertos Argentina 2000 as a solid credit option, “since it generates the majority of its revenue in dollars and, therefore, may be less affected by devaluations.”
Looking to 2024, IOL recommends”a large number of Argentine companies, especially in the energy and agricultural sectors present good fundamentals and excellent results, including companies such as Cresud (CRES) and Puerto Central (CEPU)“.
“Given that the Central Bank needs to accumulate reserves, Argentina needs a sustained trade balance surplus and therefore this would be achievable with a high real exchange rate. For investors who want to position themselves in fixed income and obtain returns in strong currency over the next year We suggest investing in global bonus GD35“, they claim from the IOL.
Source: Clarin
