What value do they estimate at the end of the first year?

Argentina



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In the market, they believe that the tension with the dollar and bonds will continue. Qualifiers about to set the default country. Strangers on the economic future

"It has not stopped, things have calmed down a bit, but here nothing has changed – one government out and weakened and another one that has four months to start." This will result in high volatility. and, in the middle, sparks in price, "warned an investment fund to ensure that the truce of the last two days of the week is, finally, that: just a truce.

"We will continue to put pressure on all fronts, every day will be a battle, the market has been hit very hard, and any news can trigger more discomfort," predicts the experienced trader.

Consultatio, the company of guru Eduardo Costantini, agrees with this badessment. "With a government that has no power and power that it does not have, the transition to December 10 looks like an eternity." The price of badets will depend on how this transition will develop, "he said.

The uncertainty about the present and the future is not for less: the local and international financial community has gone from paradise to hell, without scale. The operators left their offices on Friday 9 amidst a climate of euphoria without imagining the nightmare that awaited them 48 hours later.

The market has succumbed to the electoral state of Alberto Fernández and badet prices (as they do in the past) are being recalculated with violence. They decided that the peso, bonds and shares of an almost certain government of Kirchnerism were worth much less. And it was so.

The retail dollar climbed 25% during the fateful week, to $ 58.12; while bank paper collapsed by 50% in dollars and bonds suffered a 30% loss. The feeling that floated in the environment is that Argentina is about to stumble over a new default on its debt.

"Dollar bond prices have fallen to restructuring values, with parities below 50%", Consultatio Asset Management details.

The situation of the actions is not an oasis either. The banking sector seems to be the one that will suffer the most in the short term. According to Delphos Investment, the value of banks is generally based on attractive yields or the growth potential of the sector.

"In terms of profitability, we find that bad debts continue with the upward trend, which affects the profitability of banks.On the other hand, due to the prevailing economic uncertainty and, in particular, , future economic and financial policies, growth The potential of the sector is a big unknown, so we think there is still room for new challenges, "notes Delphos.

Rating agencies have appeared

Friday did not help with the appearance of Fitch Ratings and Standard and Poor's (S & P). Both reduced the debt rating and left it default. The latter was fuming with the forecasts on Argentina:

– "The pronounced turbulence of the financial market, with a significant depreciation of the Argentine peso and a rise in interest rates, after the primary elections last Sunday in Argentina, have considerably weakened the already vulnerable financial profile of the sovereign."

–"This more complex economic scenario (with a deeper and prolonged recession, even stronger inflation and tighter dynamics for debt and financing) is increasing challenges for both current and future authorities as a result October elections and with a new government taking office in December.

– "The negative outlook reflects the risks Argentina faces, while the government is working to stabilize the economic and financial markets, and there is still uncertainty about the private sector's willingness renewing its public debt and keeping its holdings in pesos while depreciating highlights the government's high funding requirements. "

Dollar: projections

In Wall Street banks, there is also a skeptical view of what is coming. For example, Bank of America-Merrill Lynch (BofA) predicted that the dollar will reach $ 70.50 later this year. In other words, taking the price of the wholesale market ticket at the end of Friday, which was $ 55, would represent an additional 28% increase by the end of December.

The BofA forecast does not stop there: he notes that the exchange rate will accompany inflation next year (around 50%) and that the dollar will reach the end of 2020 (the first hypothetical year Alberto and Cristina) at 106.6 pesos for one dollar.

Another relevant question is the debt, or rather how this government stands still and the one that remains with respect to repayment (or not?) Bonds. UBS, another giant investment bank, says that Argentina 's default is not a foregone conclusion.

Of course, this will fundamentally depend on the political doll of the next administration, not only a new agreement with the IMF (which is obvious), but also a market access for refinancing maturities.

But for that it misses an eternity. The very short term is what prevails in the market. And the keys to watch ahead, according to Consultatio, are:

-The fifth revision of the IMF, September 15. On the financial side, the approval of 5.4 billion US dollars is essential to be able to close the financial program of this year: without this contribution, it should liquidate 30% of the net reserves of the Central Bank in order to face repayment of the debt. expected, always renewing 30% of the maturities of Lecaps in pesos.

– The true importance of the contribution lies in its political significance. IMF support through the approval of disbursements could be a turning point in reducing political uncertainty, acting as a coordinator between the ruling party and Kirchner and facilitating the long road to December.

Of course, the eyes are on Hernán Lacunza, the new finance minister, after Dujovne's departure. The replacement took place at a key moment: a new IMF mission to Buenos Aires was in full countdown to verify compliance with the fiscal and monetary targets set in the second quarter.

– The intention of the candidates to bring signs of tranquility to the market. At the beginning of the week, a very complex situation was noted: Macri openly criticized Kirchnerism for the reaction of the market and Fernandez reacted by being very little open to dialogue with the president. This made the situation worse.

The telephone communication between Macri and Fernández on Wednesday helped calm the waters. A press conference of the latter, a little more moderate in the face of the complex situation, also helped. Fernández is encouraged to moderate his speech and avoid a major failure, because the risks of not winning in the first round are very low and that it would not be advantageous to badume an economic, financial and social instability aggravated .

-The signals of Fernández and his team in economic matters. Since the victory is almost neglected, their claims on economic issues are very relevant and have the ability to be transferred to the market.

The same goes for your economic team. All made it clear that they were not thinking about a default or an exchange rate. At this stage, from the market point of view, the most doubtful could go through its fiscal vision and its structural reforms, problems that must be renegotiated with the IMF..

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