02/28/2020 - 13:00
At the close of the week the Argentine papers have no respite. Amid the global impact of the coronavirus and the persistence of uncertainty due to debt restructuring, dollar bonds fall above 2% and the Buenos Aires stock market falls 1.3% . In the first two months of the year the Merval already accumulates a fall of 18% . Thus, the country risk rose 4.6% and reaches 2285 basis points.
Argentine bonds are trading down, led by the Discount that loses 3%. Thus, the country risk rises a new step and reaches the highest level since the change of government.
Alternative dollars also moved. The cash settlement jumped to 82.3 and the dollar bag at 80.7 pesos. Blue remained at around 78 pesos.
The collapse of the markets comes at a particular time for the Government: it has a month ahead of it to try to close an agreement with the bondholders who have in their possession debt securities issued under foreign law. It is a mystery to determine whether or not the global scenario can influence this negotiation.
More than 90% of Argentine shares are traded in red on the Buenos Aires stock exchange and the same goes for ADRs in New York. In the latter case, only Telecom with 2% and Mercado Libre with 5% have positive results so far this year.
In the Merval, the loss accumulates 13% for February and 16% for all 2020. The index had its summer at the end of December, when the first measures announced by Alberto Fernández gave the market some air. That month it rose 20% in pesos , which allowed it to close the year with an increase of 37% , against an inflation of 53.8% . But by 2020 the panel rebounded to the compass of Argentine risk and in the last fortnight of February ended under the effect of the coronavirus.
Last year the Merval had collapsed after the PASO with losses for bonds and shares of up to 75% in dollars. In the year, the S&P Merval dollar drop was 30%.
So far this year, advances and stops in debt restructuring define the mood of the market.
"Equity was a reflection of what happened in the bond market, which in turn is a mirror of what happens with the news about debt," said Nery Persichini, an analyst at GMA. "After a plethoric December everything went uphill for assets. The news was negative in terms of expectations. Equities are subordinated to what may happen with the debt knot ."
For Persichini "it is very difficult for Merval to have a vigorous recovery if the country risk continues in the area of 2000 points . Until the issue of debt is resolved, the actions will continue to navigate through turbulent and low waters."
"Argentina already has little participation in the portfolio of institutional investors because they have been selling us for two years," said Gabriel Caamaño, of Consultora Ledesma. "But something remained and when the investor does not want risks, the first thing he sells is the most risky thing he has in his portfolio ."
"The prices of Argentine assets are already on the floor. That does not imply that the situation can be further complicated . This is an additional shock in an already negative context. We must not forget that China is our second trading partner. A slowdown in China as a result of the coronavirus is rather inconvenient . Argentina needs the world economy to be able to restructure the debt, "said Caamaño.
The coronavirus effect was felt again on world stock markets that are emerging to have their worst week in a decade.
London loses 3%; Frankfurt, -3.2%; Paris, -2.6%; Madrid -2.5% and Milan, -2.4 In all cases, the cumulative falls so far this week exceeds 10% . In New York the Dow Jones falls -3.7%.
In Asia, Tokyo fell 3.67%; Hong Kong, -2.42%; Shanghai, -3.71%; and Seoul, -3.3%.
From Consultatio they indicated that "the resurgence of fear by the effects of the coronavirus in the global economy triggered a " flight towards quality " of a significant magnitude".
According to Consultatio in the local scenario "the international context is a second-order factor in the negotiation of the debt swap: in any case this enhances the structural vulnerability of Argentina, fed back at the current juncture that lacks visibility and tangible progress in terms of debt".