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The desire for the dollar cools and new investment alternatives are born


A new way of doing business emerges, the dollar ceased to be an object of desire, there is new investment alternativeswhat is coming for the capital market.

The Central Bank of the Argentine Republic continues to add reserves and debt, the reserves already total US$26,640 million, and the issuance of debt in Bopreal would add US$6,640 million, which leaves a net reserve quite tight compared to dollars. which received US$21,209 million.

The monetary circulation at the time Javier Milei took office amounted to $6.6 billion, and as of February 8 it totaled $7.7 billion, it must be kept in mind that it was issued to buy dollars.

Remunerated monetary liabilities as of December 10, 2023 amount to $22.9 trillion, while as of February 8 they total $33.6 trillion, and here is the problem to be solved, since they are increasing at high speed.

The equilibrium dollar at the time of taking office on December 10, 2023 was $1,558, while currently the equilibrium dollar is located at $1,667.

We must stop looking at all these numbers, because the reality is that the government no longer has a fiscal deficit, it has no need to issue, the increase in rates takes away profitability from companies, price increases generate a high recession, and There are no pesos on the market.

The price of the dollar is drowning due to the lack of pesosthere are no tickets to go out to capture the price of the Dolar blueand the sale of the MEP or CCL dollar to go out to look for liquidity and cover the red of the companies.

Sales in stores are being made through electronic payment methods or cards, as a result of the lack of tickets and high prices, this causes the formal sales mix to increase and changes the sales equations, which determines less profitability, and more price adjustment in the economy.

In this context, we have dollars on offer and high liquidity of pesos in the system, but no bills on the street. In this context, the investment mix changes, and we are going to transform the market.

The fixed term interest rate At 110% annually it is not captivating, many turn to the fixed term in pesos adjusted for inflation, which is capped at $5 million, and which many banks try to avoid because they do not know what to do with money indexed for inflation. For this reason, we notice that there is a great demand for bonds in pesos adjusted for inflation, the cheapest being the TX26, which is a bond whose technical value is $1,000, while its market price is 20% higher, being the price that the investor has to pay to access a flow of funds indexed by inflation and that pays a rate of 2.0% annually. This bond pays amortization in 5 consecutive monthly installments of 20%.

The TX28 bond has a technical value of $1,000, but its stock market value is 35% higher than the technical value. This does not respond to its maturity date, which is longer than the TX26. It is due to the amortization of the title. It operates from the month of May in 10 semi-annual and consecutive installments.

The DICP is a bond that pays amortization and income of 5.83% annually starting in June 2024 in 20 semiannual and consecutive installments of 5.0% of the capital, and is another positive alternative for the investor, although longer. breath.

Conclusion

.-The dollar is ceasing to be an object of desire, the market is highly offered and it will be difficult to rise as long as liquidity does not return to the market. To put it better, it can rise, but it is unlikely to do so at the same rate as inflation.

.-Inflation is unlikely to subside suddenly, we believe that we are going to have double-digit inflation until April or May, then it will be one digit, but high, there is a lot of room to rebuild rates, and the recession would last at least 6 months.

.-By the second half of 2024, Argentina should reach a new agreement with the IMF, which is why by that date a readjustment of many prices in the economy is expected, and especially in financial matters.

.-The decline in the future dollar shows us that a devaluation of the peso is not on the immediate horizon; the wholesale dollar will follow a path of micro devaluations until the second half of 2024.

.-Buying bonds in pesos seems the best way, and shares the path of hope for a great business in the future, which we will soon develop.

Financial analysts





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