Buenos Aires Herald 
Argentina’s sovereign bonds and stocks ended January with very good results. This upward rally was backed by investors taking positions in the face of attractive values and succulent returns in a month when the government announced an external debt buyback for US$1 billion, but when inflation is still expected to be near 6%.
Thus, top market index S&P Merval, which hit an all-time high of 267,244.18 points this month, accumulated a 25.47% improvement in January (13.9% measured in dollars at the implicit exchange rate). The Merval’s in the first month of the year was led by stocks in the energy and financial segments, and stood out as one of the biggest hikes among its global peers.
Among the Merval’s top-tier companies, the largest increases were registered by Grupo Financiero Galicia, which climbed 47.6%, Banco Macro (up 42%), Transener (41.8), YPF (39.9%), BYMA (37.9%) and Banco Supervielle (34.3%). Meanwhile, among the rest, the three ones that grew the most were Celulosa (109.8%), Fiplasto (70%), and Camuzzi (51.3%).
“Local equities showed significant gains in a month where the business climate improved, although you could feel some volatility. Beyond specific stock from the General Panel that rose to the top of the ranking (CELU, FIPL, CGPA), the banking sector showed a great performance with increases of 50% in Galicia. YPF joined this group by climbing 40%. The stocks on the losing side were less representative,” Tavelli explained in his report.
In January, international markets paid attention to the Fed’s decisions regarding the rise in reference rates. In the first week of the year, the notes from the last meeting were released. Despite reports saying they are considering slowing down the increases, a restrictive monetary policy continued to be applied. At the same time, China’s GDP grew more than expected, as did the Eurozone’s.
In this context, Argentine companies on Wall Street also recorded solid gains, led by Mercado Libre (up 39.6%), Grupo Financiero Galicia (37.4%), Banco Macro (33.9%), Despegar (32.5%) and Irsa (32.4%).
Experts claim that the upward path of Argentine assets in the middle of the month occurred after the announcement of a foreign debt buyback for some US$1 billion. “Several analysts speculate on the possibility of extending the amount allocated to buy back these instruments,” said Rava Bursátil’s Fernando Staropoli.
For their part, bonds in dollars grew by 13.8% in the same period, encouraged by the external debt buy back. Highlights included the increases in Global 2029 (33.8%), Bonar 2030 (33.7%), Global 2030 (32.6%) and Global 2041 (21.3%). Meanwhile, country risk fell by 18% and closed the month at 1,819 basic points.
“CER-adjustable bonds showed increases of up to 10% in the longest series. Dollar-denominated bonds had a better final balance, which in some series exceeded 40% (measured in pesos), with an increase of parities and implicit FX. Duals will moderate the rises. GDP coupon in pesos climbed around 30%,” Tavelli explained.
For their part, dollar-linked sovereign bonds closed the month with gains of 4.5% on average along the curve. Duals ended January on the positive side, with a 5.1% average. Regarding the CER segment, both Leceres and Bonceres accumulated a general 5% monthly increase, reported Grupo SBS.
At the domestic level, the January consumer price index number remains to be seen, although analysts claim that it will be around 6% up, a rise from the December figure. “Inflation is once again escaping from the government’s parameters, proving price controls ineffective,” said Lautaro Moschet, an economist at Fundación Libertad y Progreso, who estimated: “At the moment, there are no theoretical reasons to think that inflation numbers are going to drop, and the uncertainty of an election year can make the situation even worse”.
