It was a difficult year, marked by a jump in the dollar, a drop in activity and a rapid increase in taxes, to which was added a complex international context.
The balance of this year 2018, which has already been completed for financial and capital markets, both internationally and locally, leaves a bitter taste for analysts and investors.
In the first case, there were five main reasons that negatively influenced the evolution of the main financial variables:
1. A consistent increase in interest rates set by the US Federal Reserve.
2. The trade war between the USA and China, which, in addition to some short-term truces, such as those achieved during the G20, raised the nervousness of the markets.
3. Fear of slowing the global economy.
4. The confrontation between the government of Italy and the European Union about how it will face a serious fiscal problem.
5. The political crisis provoked in the UK by Brexit.
Already in the national order a chain of negative factors started on “28D”, that is, on December 28, 2017, when the government announced a revision of inflation targets For all this year, the decision was interpreted as a loss of independence of the Central Bank.
Then, in April, the application of income tax for foreign investors was added, which led to their dismantling of portfolios of bonds and stocks, followed by a collapse of contributions, which began the run. the exchange, which seemed only calmed down at the end of September.
That is what happened thanks to the assumption of the new president of the Central Bank, Guido Sandleris, who introduced a new monetary and exchange rate policy and which, at least for the time being, managed to relieve the pressure on the dollar.
With unusual sincerity on the part of the official, Sandleris himself admitted that "this government has made mistakes."
“I would summarize them in two big concepts: on the one hand, to underestimate the difficulty of correcting these imbalances. In particular, I believe that we have made a mistake in the necessary sequence, which should have a correction of fiscal imbalance, the resolution of the problem of inflation and the correction of imbalance relative to prices. And I also think that there was an underestimation of the speed with which international conditions may change"He expanded.
These are statements that clearly corresponded to what left a year for investors and investors, who had to go through a really difficult year.
2018: winners and losers
As a result, the fall suffered in December almost 6%, Merval finished the year with a negative balance, about 29,900 points.
For comparison: if we compare the results with the dynamics of a key variable, which investors always look at, the result was extremely discouraging: in dollar terms, the fall in the stock market was about 55%.
Meanwhile, with a small loss of 0.25 percent in 2018, Merval was well below inflation, which private analysts estimated at almost 48 percent.
According to estimates by Diego Martínez Burzaco, director of MB Inversiones, the Buenosayreans index this year reached a historic high of about 1,800 points in dollars as of January 31. However, this level did not last long and broke 1000 points immediately before the approval of the IMF loan. After the agreement, another peak was reached at almost 1,200 points, but it ended with the closing of 2018 at the level of 885 points.
As for the implementation of basic actions Petrobras was one of the few notable companies with a 161% increase. during the whole year.
Until Tenaris, despite weak results over the past three months, ended up closing a growth of 39% over the same period.
TGS (32%), YPF from 18.2% and Aluar with an increase of 13.8% were much lower.
Ruben Pasquali, a market analyst, said that “in terms of the stock exchange, outside the last minute regression, Between the elections in Brazil and the rising dollar, Petrobras became the winner of Merval. ”
The other side of these strong promotions was embodied by a number of documents that showed significant losses during the year.
These actions were led by Cablevisión, which collapsed by almost 50%, followed by Supervielle with 44% and Metrogas (-41%).
Bonds and Fixed Terms
Papers denominated in dollars, which include a devaluation of their prices, were allocated for government securities listed on the local market.This is despite the decline in their contributions in hard currency and which is reflected in an increase in country risk.
In this sense In the series with the best route of the year were Bonar 2020, which won 76%, then Bonar 2024 (60.5%) and Couple in dollars, with 42%The Centennial Bond was placed lower, with an income close to 40%.
The ADRs and shares of Argentine companies, meanwhile, received a serious blow, especially from the financial sector, in this case led by Supervielle, who lost 71.5%, and then Macro from 63.5% and Galicia Group, from 59.1 percent . On the other hand, the price of the Corporación América fell by 59.5 percent.
As for traditional fixed terms, investors who have chosen this tool have found that productivity is about 35%, well below 48%, which promoted retail prices.
In parallel, those who decided on the UVA amendments, They managed to beat inflation based on interest rates paid by banks.
For Pasquali, winners and losers should be measured in sections: “It was a difficult year, and gradually, from the end of August, he won the pace, outpacing all financial allocations, but Those who were between the end of April and August were badly hit because they were faced with two devaluations. ”
From the point of view of the international context, emerging stock markets showed a decline in dollar terms per year of about 17%. In addition to the Merval landslide, the San Pablo stock market also showed negative values, as it fell by 6%.
On the raw materials side, the key data are The decline in oil was more than 21%, while gold fell by 2%, despite the return of the last wheels.
As for agricultural products, the note was given by corn, as its market price in Chicago increased by 24%, while wheat added 7%, and soybeans increased by 5%.
What's left december
As investors begin to prepare for the beginning of 2019, the Buenos Aires stock market ended the last month of the year with the worst of the sensations, because there were very few papers that could come out,
In this sense, Mirgor and TGN can hardly be mentioned, which grew by 16% and 10% respectively. They completed the Edenor table with 5.8% and finally BYMA, which grew by 5.1%.
In the opposite direction, was feed a group of stocks that lost more than 10% in DecemberLed by Pampa, who ranked first on this podium, with a reduction of 13%, followed by Tenaris and YPF, which averaged 11.5%.
While Ternium has dropped by 11%, and Cablevisión – by 10%.
These poor performance, which ended in December, are associated with high volatility affecting the market, as well as doubts about the future development of the economy and, consequently, the result of listed companies.
The formalization of a very tight monetary policy has a direct impact on the capital market, since caused an outflow of funds that moved to more profitable options, at least in the short termFor example, treasury bills in dollars and capitalized in pesos.
As for the stocks and ADRs of Argentine companies listed on Wall Street, the rest of the month is also very negative, since almost all the shares fell, led by Mercado Libre, which lost 17.7% and then Corporación América, which fell by 17%, and Despegar, with a reduction of 16.9%.
As for government securities, on the other hand, there are good returns on the “dollar” bonds of the city of B. As. Class 5 2019, which received 3.9%, and a discount in peso, which increased 1.9 percent.
On the other hand, the discount in dollars fell by 10.7%, and the pair in pesos fell by 5.1%. By the 100-year-old bonus, there was no luck: the decline was 4.5%.
Bond related country risk ended the year at 820 points — it began with 347 points — confirming the poor evolution of long-term bonds. It happens that at rates plus rates the prices of government securities suffered more.
All this in the context in which retail dollar moved significantly lower than in previous monthsDespite the rise in prices of the last wheels, they closed almost unchanged at $ 38.60. While retail inflation is estimated to be around 2.5%.
On the other hand, the interest rate of fixed terms, which again attract supporters, averaged about 4%.
In this way, who made a deposit at the beginning of the month, received an increase of 1.5 percentage points in terms of inflation and 2%, if he compared his performance with the dollar.
What to expect for 2019
At least in the first half of next year, everything indicates that the market will continue to operate in conditions of marked volatility, so the City recommends that you proceed with extreme caution.
The items that offer monitoring include program progress with the IMF and its direct implications for the level of activity, as well as everything that is inherent in the election year.
As for what may happen to bonds and stocks, the light of hope is given by Michael Hasenstab from the Templeton Global Bond Foundation, who claims that Argentina seems ready to lead a recovery among developing countries in early 2019.
As a recommendation, the tools chosen by analysts, which provide a good margin of safety, are lats in dollars, short bonds in currencies, and some mutual funds (FCI).
In this sense, Rafael Di Jurno, director of Proficio Investment, proposes Bonar 2020 (A020), which today brings 11% per year: "The probability of a scenario in which the government is difficult to minimize is overestimated." debt. If fiscal performance can be balanced, and the BCRA lowers the rate, it should recover its price. ”
In parallel, Fabian Charlotti, head of ICBC's asset management, argues that “a very important correction is taking place in international markets due to flight to quality, that is, when investors are looking for assets with less risk, and this obviously does not play in Argentina’s favor.” ".
“As for the local level, the monetary policy will continue and will maintain high interest rates, and there will not be many pesos on the market, which will lead to a decrease in activity in general. This will calm the dollar. We expect good business from high real rates for investors, but then, As we approach elections, we will see progressive dollarization of portfolios", completed.
To rebalance higher-risk Argentine portfolios, Lucas Laynez, managing partner of Puente, recommends short-term sub-sovereign bonds with guarantees in the form of royalties for the exploitation of hydrocarbons and “quality” contractual obligations.
Meanwhile, based on the assumption of the inclusion of a certain rate, which today is not widely estimated, taking into account the specific time through which the market passes, the director of Proficio advises to add Mirgor shares.
For Lucas Gardiner, director of Portfolio Personal Inversiones, "in the local scenario, political and economic aspects are part of the analysis to try to assess what will happen."
“This leads to the fact that beyond even economic signals, the scenario that may arise next year is binary. As a result, assembling financial portfolios can vary greatly depending on position or expectations, ”says Gardiner.
“At the moment, for conservative positions, we recommend a greater risk in dollars, such as Letes, although, assuming a higher risk, we believe that a certain position is interesting, Bonar 2020, which practically guarantees its payment by the IMF umbrella,” adds the Executive. director
Regarding the position in pesos and the understanding that rates will remain high in real terms, Gardiner is leaning towards Lecaps and FCI, which, in his opinion, can be a good alternative to the traditional fixed term, because today they make some contribution more commission points and liquidity .
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