In a market with increasingly limited options to counter soaring prices, stocks are establishing themselves as an anti-inflationary hedge option. In the first 34 days of 2024, the Merval index has accumulated a gain in pesos of almost 42%, well above the inflation accumulated in this period, if we take into account that the expectation of private consultants is that the CPI for January will be around 20%.
After the post-devaluation rate decline and with the gap remaining close to 50%, investors in the local market are opting for Argentine companies as a way to preserve the value of pesos. “The Merval closed the trading week on a positive note. The local stock market index started the month of February in the best possible way, accumulating more than 4% profit in two days”they explained in Rava Bursátil.
Other investments favored by Argentines have not had the same luck: both fixed-maturity and index-linked bonds have reflected inflation, but have lost almost 9% compared to the rise of the financial dollar. Funds money market, which gained popularity thanks to applications like Mercado Pago or Ualáthey were the big losers: they found themselves with negative returns of -10.4% compared to inflation.
In January “not only was it very difficult to counteract the price increase, but it was almost impossible for local assets to cope with the increase in financial exchange rates. Not even dollar bonds, which were among the best investments of the month, were be able to take advantage of “cash with liquid”. Only stocks showed positive hard currency numbers”the consultancy firm GMA Capital underlined.
The banking sector roles are the ones driving this rise, as they would benefit from the “liquefaction” of the Central Bank’s liabilities and the measures to deregulate the economy that Javier Milei seeks to implement. On Wall Street the ADR of Galician Financial Group racks up nearly 27% in dollar terms since the first day of the year. The banks follow Macro and Supervisionwith dollar earnings of 20.6% and 16.1% respectively.
“Despite the strong rise of the financial dollar, which appreciated by 28% in the month of January, the truth is that 14 shares of the 21 that make up the Merval beat the rise of the MEP dollar in the month of January, which was 28% .3%,” said Massimiliano Donzelli, Head of Research at IOL InvertirOnline. “In line with what happened in the last months after the ballot, the market has shown a new jolt of confidence for the governing administration, which has already implemented the first adjustment measures and is currently facing its first major challenge in the Chambers legislative”.
Source: Clarin
