Despite the ups and downs of the economic situation, Argentina presents a scenario of great opportunities in the financial markets, linked to the potential of domestic companies, mainly in Vaca Muerta. In addition, if the cepo were to end in the medium term, it would allow the country to return to the emerging markets, attracting dollars to the market and raising the price of bonds and shares of Argentine origin.
This year, Argentine equity has made great progress: up to October, it has accumulated a 45% increase in hard currency, surpassing the S&P 500, one of the main Wall Street indexes, which has advanced around 20%. Meanwhile, sovereign bonds had a strong rally reaching a surprising rise of more than 55% in dollars, from the u$s37 at which the GD30 ended in 2023 to the almost u$s60 it is currently touching. However, analysts state that this is a bullish streak that has only just begun.
At the BA Economic Forum recently held at Malba, experts discussed what is expected for the stock market in the coming months, and whether it is time to retire in local assets.
Bonds and stocks: the advantages of an "emerging" Argentina
The macroprudential conduct adopted by the Government paves the way for Argentina to reinsert itself into the world in order to obtain financing. Thus, economist Miguel Boggiano stated that the possibility of our country entering the international markets is high, and if this were to materialize, it could facilitate the payment of debts that the country has in its portfolio, generating greater stability.
But in addition, Boggiano argues, since it is not clear that the US will enter into a recession, Argentina should depend on itself, anchored in the fiscal surplus goal, in order to recover international credibility .
In this sense, the CEO of Carta Financiera says that "we should become an emerging country again, once the cepo is released. When you are classified in this way, if or if different countries will have to buy local securities because they make up the index".
International banks such as JP Morgan anticipate that Vaca Muerta would have huge advances in the following years. Especially, the leading company YPF is valued at u$s24, that is to say that today it would be undervalued by 10%. For this reason, the firm could jump at any time, driven by its strong fundamentals linked to a higher production of oil barrels and new business development.
"Whether you like Milei or not, investors should not miss this trade to buy Argentina until this happens, foreign speculators are already getting ahead of themselves," Boggiano said.
How many dollars would come to Argentina if it is classified as an emerging country?
Many benefits would accompany the change in Argentina's reputation and recognition by risk rating agencies. On the other hand, Gustavo Neffa , Director of Research for Traders and FinGuuru, with an optimistic tone, anticipated that everything will converge in our country; today Paraguay is financed at 6%, we could soon have access to loans with similar rates, if we do things right, the dollars will come on their own.
There are several creditors that have their sights set on domestic financial assets, he commented. "And with respect to what's ahead, we are still tidying up the house, while we observe a deep obsession with fiscal behavior. Perhaps soon the negotiation with the IMF will be resumed, which, with the drop in interest rates at international level, will help Argentina to get back on track".
Specifically, the specialist pointed out that being an emerging country is very important for economic and financial stability due to the fact that we currently lack this classification. Having this distinction, as most Asian countries and India have, will guarantee that there are clear rules in the markets in Argentina, which would attract greater investment flows.
If we analyze in numbers the benefits that Argentina would achieve in case of being associated to a lower volatility, Neffa indicates that it is estimated that around u$s1,000 million could enter from open funds, while from some closed ones, such as sovereign or international hedge funds, between u$s6000 - u$s8000 would arrive. This would generate an explosion in the prices of domestic assets.
Although he concluded by warning that it is necessary to be patient, because the opening for the formal reclassification process could begin only in February with a review presentation and the news would only be communicated in the middle of the year, only in the event that the cap had ended before.
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