The Chinese economy slows down, Wall Street collapses and hits Argentina – 17/12/2018

Black Monday for Argentine shares. In Buenos Aires, the Merval fell 3.93%, while local corporate newspapers listed on Wall Street have also seen a decline in up to 8% Local badysts attributed the brake of the Chinese economy to bad environment in New York and also to a probable increase in the rates of the Federal Reserve. But they do mark the impact of local factors such as Electoral uncertainty in the midst of an economic recession.

The dollar, which closed Friday at $ 39.03 for the sale, closed yesterday at $ 39.21, according to an average reported by the Central Bank. Previously, it was $ 39.32.

Argentine bond prices also fell, while country risk rose by 2.6% and was 782 points, fueling the trend of mistrust towards Argentine badets. Country risk, which in January represented less than one-third of the current risk, returns to a level close to that of September, when the second part of the agreement with the IMF had not been signed, which involved the injection of more dollars and the implementation of the "monetary aggregates" program.

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The Merval has already registered a decline of 5% in December. The day was particularly negative for the roles of the banks. Banco Macro fell by 7.6%, the Galicia group by 7.4% and the French by 6.4%.

With the exception of Aluar, Petrobras, Cresud, Puerto Center, Edenor, Transportadora de Gas del Sur, Tenaris and YPF, all other titles of the Merval are in red this year.

The local falls were even higher on Wall Street. Banco Francés lost 6.7% of its value, the Macro fell by 8.2%, Supervielle declined by 8.2% and Galicia by 7.2%. The annual balance of the price of ADR (Argentine shares) gives a darker image than the local one. All local business papers are in red. The French have fallen 57.8% so far this year, the macro, 66.9%. Supervielle dropped 73% of its value this year, while Galicia had already reduced its value by 61.4%.

"There are local factors in the short term that cause concern, but what matters most is the problems of international markets," said two badysts, concerned about the sharp slowdown in the Chinese economy and the consequences of the American trade war. and China.

Public debt obligations, on the other hand, have not suffered as much. Dollarization fell between 1.2% (AY24, the most traded of the day) and 2.7% for the Dollar Discount (Dicad). In pesos, the failures were a little less important. Securities that have expired in 2019 have reasonable returns, while those expiring in 2020 offer very high profits, as if this were an indicator of higher risk.

"There is a downward trend that persists, local problems come together and an effect on what will happen on the outside," they interpret. According to market forecasts, the Federal Reserve will increase the rate to 2.25% -2.50%, despite the public opposition of US President Donald Trump.

"When there are trends in "flight to quality", investors tend to take refuge in safer badets, in dollars, and do not approach those who are perceived as "risky", as is the case of Argentines ", they have relied on the financial field of the society.