Markets: stocks and bonds rose at the close in a week marked by the start of Massa’s administration

The stock market assimilates the announcements far from the euphoria.

The Buenos Aires stock market rose this Friday, in the midst of an operation awaiting the implementation of recent economic measures announced by the new Minister of Economy, Serge Massa, which will seek to channel the country’s accounts. At the end of the wheel bonds in dollars were added, with gains above 1 percent.

The leading stock index S&P Merval of the Buenos Aires Stock Exchange gained 0.5%, to 121,003 units, in a selective and reduced place of operations, after closing balanced on Thursday. The Merval accumulated an improvement of 38.5% in July.

The dollar bonds ended with an average gain of 1.3%according to the reference of the Globals with foreign law, while the risk country of JP Morgan fell 60 units for Argentina, to 2,398 points basic, at 5:50 p.m., with the help of the rise in rates of US Treasury bonds, with a treasury a 10-year bond whose yield grew 16 basis points at 2.84% annually.

Massa pointed this week to fiscal austerity measures, strengthening of the Central Bank’s reserves, promotion of foreign trade and reorganization of external accounts, among other points.

“After the news from Sergio Massa, the market was calm, and hinted that it expects the passing of days to see how each of the aforementioned changes will impact and seeking to anticipate the possible modifications to come,” he estimated. Ayelen RomeroAccount Executive at Rava Bursátil.

On Wall Street, Argentine stocks and ADRs ended trading with a positive trend. They highlighted the rises of Central Port (+7.1%)Banco Supervielle (+6.9%) and Transportadora Gas del Sur (+6.2%). YPF advanced 2.6% to USD 3.75, and Grupo Galicia gained 2.3 percent.

Source: Rava Stock Market.  Prices in dollars.
Source: Rava Stock Market. Prices in dollars.

Although the measures were positive, the market is not entirely convinced of them since details of how they will be carried out are still lacking. The first reaction of the market was positive, but then the optimism faded after some foreign banks gave their opinion on the announced measures.

“With Massa as superminister of Economy, the rally was punctured, because it would seem that this is a little more of the same, disguised as something else. Therefore, if one asks the problem to be the solution, common sense generally says that it does not work, so let’s leave it there, “he said. German Fermo, Head of Strategy of the IEB Group (Invest in the Stock Market).

“I think that the most important front in everything that this announcement is about is rates, we will see which is the sector of the population that ends up paying them; the larger the sector, the greater the ability to reduce the deficit. There is still a lot of uncertainty, so I don’t have too many expectations about it, “added Fermo.

According to the foreign bank Goldman SachsArgentina needs a more conventional and disciplined policy mix to rebalance the economy, and that entails establishing a credible path to structural fiscal consolidation and an exchange rate that can reflect the macro fundamentals that would require a bold relaxation of financial repression/controls .

For J. P. Morgan, the announced measures will probably not succeed in stabilizing the main macro imbalances, since they lack a stabilization plan. In addition, the bank stated that the focus is on politics. Until now, the governing coalition has been characterized by belated decisions and a trial and error style. That makes a compromise credible on the face of it difficult, unless it is accompanied by what could be seen as politically costly measures heading into an election year.


The market began to rule out the possibility of a strong jump in the exchange rate
In search of USD 5,000 million for reserves, the Central Bank defined how it will encourage exporters
José Ignacio de Mendiguren: “Argentina is generating dollars, this crisis that they want to impose on us is not true”
The Central Bank regulated the measures to stimulate the liquidation of foreign exchange from exporters
The United States added 528,000 new jobs in July, more than double the forecast, and the unemployment rate fell to 3.5%

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