From the “relief” of the market to the caution of analysts

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experts speak of “exaggerated optimism”, despite the drop in “blue” / web

The arrival of Sergio Massa to the presidential cabinet as Minister of Economy, Productive Development and Agroindustry seems to have been well received by the markets, expecting what may happen this week, when he will take office and announce the first measures. Meanwhile, different analysts showed caution and asked to wait for more details about the new official’s plans to get the country out of the economic crisis in which it finds itself.

Parallel dollars fell on Friday and sovereign bonds rose in yields a day after the government of President Alberto Fernández announced the appointment of Massa as economic “super minister.”

“Argentina has an urgent need to restore confidence in the economy, and the constant change of ministers has the opposite effect,” said economist Benjamín Gedan.

The monetary strengthening registered on Friday extended a trend that began a few days ago amid rumors that Massa, still president of the Chamber of Deputies, would enter the cabinet.

“The market reaction reflects relief that someone with political skills and strong party backing has taken on this crucial position,” said Gedan, who is interim director of the Latin America program at the Wilson Center, a research institute based in Washington. Washington. “He is someone who cannot be removed easily, and the idea is that there will be some coherence in the policies,” he added of Massa.

“The reaction of the market was positive because Massa is seen as a pragmatic figure, with a good relationship with businessmen and the market,” said economist Nery Persichini, from the consulting firm GMA Capital.

“The improvement in the valuations of Argentine assets responded to the expectation that at least the imbalances would not continue to deepen,” said Persichini.

However, marked by an almost endless series of economic crises, and at a time when inflation is projected at more than 80% this year with poverty at 37%, Argentines are wary of the measures.

According to Persichini, “doubts revolve around its real capacity to reduce public spending and moderate the fiscal deficit.”

“The market is wondering if the new ‘superminister’ has the support of Vice President Cristina Kirchner to implement an adjustment and correct the relative price imbalances,” he added.

For the firm Capital Economics, Massa’s appointment “provides some hope that the government will honor its agreement with the IMF, although meeting the goals of the program will be an arduous task, especially due to the (presidential and parliamentary) elections next year. ”.

“It’s not pro-market, it’s pro-capitalism,” said Fausto Spotorno, director of the Center for Economic Studies at Orlando J. Ferreres & Asociados, a consulting firm in Buenos Aires. “He is not someone who is on the left,” he clarified.

Meanwhile, for Gedan “the optimism seems slightly exaggerated” and that “it is true that Martín Guzmán had been living outside the country and did not necessarily have the capacity to move in the nest of vipers of this coalition, but the fundamental problems are difficult to solve and politically treacherous”.

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