Markets in red: Argentine stocks and bonds fall for fifth round in a row

Growing political tensions between the government Javier Miley and Congress after opposition deputies gave half the authorization to increase pensions, which would have jeopardized the financial goals of the Ministry of Economy, creating an unstable climate in the Argentine stock market due to speculative realignment of portfolios. Titles debt in dollars they lose about 1% throughout the curve and push country at risk up until it reaches 1565 points.

The new pension formula will imply an increase in spending of about 0.4 percentage points of GDP. It is rejected by the ruling party and will be vetoed because it threatens the financial balance, according to Miley’s statements.

“There is no possibility that the government will be able to cover the costs associated with this increase as it does not have the resources,” the chief executive said in a statement to Radio Continental. Guillermo Francos.

In this context, the leading index S&P Merval Buenos Aires fell 2.9% to 1,525,083.67 units, after falling 0.66% in the previous session and falling 4.7% on Tuesday. This is the fifth consecutive round of decline in the Buenos Aires index.

If Merval’s fortunes are measured in foreign currency terms, the losses would be even greater, since the decline in peso prices coincides with a fairly upward trend in financial dollars, meaning that today’s dollar decline is somewhat smaller, at 2.7%. , but they bring the accumulated amount so far in June to -11.5 percent.

“A more cautious approach is prevailing among operators, waiting for tensions and political uncertainty that have been rising lately to ease, opening up space for a more decisive correction phase,” the economist told Reuters.

In the midst of renewed political tension, Miley is pushing for the Legislature to move forward with a vote on the so-called “Basic Law” and financial package, which has already received half approval in the Senate.

“Weakness is spreading among domestic assets, with country risk already at 1,500 points, given that a more cautious attitude prevails among operators, awaiting an easing of tensions and political uncertainty that have been rising recently, opening up space for a more decisive correction phase,” said the economist. Gustavo Behr.

“Added to this political noise are concerns about a possible swap payout with China being added to upcoming dollar debt, putting pressure on currencies. This comes at a time when volumes are not growing and BCRA’s purchasing pace is immediately feeling this and thus the accumulation of reserves is slowing, which is critical at this stage of greater seasonality ahead of the usual second half of the year which is associated with lower receipts export. “Parliamentary initiatives that involve increased spending when the fiscal balance and its strong protection are the focus are also of concern because, in addition to the economic effect, they return to the circle of tension,” he added.

Meanwhile in New York 15 of 21 American depositary receipts (ADR) Argentine companies listed on Wall Street show red numbers. Banking, a sector that usually suffers from doubts about the progress of the macroeconomics and rejoices in good news in the same area, is again leading the decline this Thursday. This is the BBVA Argentina ADR, which fell 3.88% just before 1:00 p.m. in Argentina.

However, this time, Wall Street investors also expressed doubts about the energy company. Pampa is Argentina’s second worst-losing ADR, down 2.58 percent. Also standing out are Despegar with 2.63% and Banco Macro with 2.60%.