Another dark day for the local market: Dollar and country risks have surged, while equities and bonds have dipped

he S & PMerval dropped 4.7% to its lowest level since September 2017 (measured in pesos); the Argentine ADRs lost up to 14% on Wall Street (during the month they fell to ; dollar securities collapsed to 13.2%; while the dollar jumped 2.5% to $ 58.66 in the mall, and Country risk increased by 9.6% to 1,990 points.

Measured in hard currency, the main group of BYMA is 437 USD, far from the 120 USD collected in the middle of the crisis of 2002, although from day to day.

"The market was overwhelmed and everything was a seller, the debt and the stock market plummeted, which put pressure on the exchange rate and did not bring the Central Bank's efforts with the sale of dollars. Discredit is on the rise and has translated into a new leap of country risk ", said a financial agent of the foreign private bank.

Aggressive disarmament after IMF meeting – Front of All

The investment climate was already very fragile, but everything was exacerbated after the opposition space, Frente de Todos, He accused the government and the International Monetary Fund on Monday of the economic problems facing Argentina. The statement was issued at the conclusion of a meeting between Fernandez and his economists and an IMF mission.

"Aggressive disarmament of foreign positions has been observed, accentuated by the readings left by Monday's meetings with the IMF," the economist Gustavo Ber said.

Meanwhile, economist Gabriel Zelpo, consulting firm Seido, said that "The statement of Alberto Fernández after Monday's meeting with the IMF clearly did not please the market."

This is done This will speed up the demand for dollars seeking refuge in the climate of uncertainty and current volatility.

"The market was very scared with the statements of the space of Alberto Fernández.There are some statements that are calm and others that scare the market.The scary ones today cost reserves "said Ámbito Rafael Di Giorno, director of Proficio Investment.

For the specialist "It is ill-advised to place the country in a useless default in a world where the bonds of its major countries have a negative return.The costs of a payment default are very high for a country in terms of debt. investment, growth and employment. "

Some investors expected that after their previous questions about Macri's economic policy and the IMF, Fernández would moderate his tone at a crucial moment in which the Fund will badess the progress of the economy to determine whether a disbursement of US $ 5.4 billion is going to the country.

But the last statement of the Front of all fell as a bucket of cold water among investors. "The rhetoric used by Fernández after the meeting with the IMF has led the market to rule out a restructuring or a" re-profiling "of debtcommented Martín Salvo, portfolio manager at Industrial Asset Management (IAM).

Critical variables

Very sensitive to the statements of the most voted candidate president within the OSP and its advisers, the market follows three critical variables with maximum attention: the Refinancing rate of the Treasury debt (Letes, Lecaps and Lecer), IMF decision on the disbursement of US $ 5.4 billion and dynamic reserves of the BCRA.

"There is a lot of uncertainty about the disbursement of the fund, and on the other hand, there is also concern that the exchange rate control is using the BCRA to use its reserves." The use of these badets means less money available to deal with future liabilities, for example, that the market is a little nervous ", Pablo Castagna, director of Balanz Capital, remarked.

The market believes that contacts with the IMF mission They are not only crucial for ensuring continuity of the relationship but also for disbursements.

IMF money is needed "to be able to transit this year's financial program without major turbulence, especially when reserves decline due to deposit dynamics, BCRA interventions and lower local debt." he says. Ber.

The monetary authority on Tuesday accumulated sales representing US $ 302 million of its reserves, the maximum injection of daily cash from primary funds. when the Rates in pesos are 75% per year. Monetary Authority it's already gotten rid of $ 1.061 million since the elections to defend the peso.

The broad advantage gained by opposition presidential candidate Alberto Fernández in the August 11 primary elections led to a widespread collapse of the financial market for fear that, under his eventual mandate, a strong intervention of the State in the economy is resumed.