The Limited Times

Now you can see non-English news...

Investors Escape Argentine Stocks: The New Bets

2021-05-06T03:20:04.455Z


The volume traded in the Merval index is at a minimum of more than a decade and the prices of the papers that are traded in the local market have also bottomed out.


Ana Clara Pedotti

05/05/2021 6:01 AM

  • Clarín.com

  • Economy

Updated 05/05/2021 6:01 AM

The Buenos Aires stock market is no longer what it used to be

.

The volume traded in the Merval index is at a minimum of more than a decade and the prices of the papers that are traded in the local market have also bottomed out: however investors do not find in these

"outlet" prices

an incentive to return to invest in Argentine stocks.

What do those who previously traded on the Merval index invest in?

Although there is surely no single answer,

Cedears' trading volume

is a good indicator: on average it already represents

80% of what is traded on the local equity market.

An accelerated migration

The S&P Merval is an index that reflects the

evolution of a set of leading stocks,

which are the most representative of the local market, that is, those papers that generate the most volume of operations.

In the last two decades it

only fell below the 300 point zone in two moments

: first in the 2001 crisis and later due to the effects of the 2008 global financial crisis.

In the last three years, a host of factors

wiped out Merval prices.

At the

beginning of 2018,

the stock index had reached a new maximum, which fell sharply after the balance of payments crisis that the country experienced since March of that year and which led to the request for assistance to the International Monetary Fund made during the Past government.

"There were

three moments

that explain the prices and the level of operations that we see in the Merval these days: first,

the exchange run of 2018

, then the collapse of Argentine assets

post PASO in the second half of 2019

and finally,

the effect of the

coronavirus

pandemic

on the economy in 2020, "explained José Ignacio Bano from IOL. "The valuations of the companies also plummeted in this period:

there are companies that are now worth a tenth of what they were worth at the end of 2017.

That impacts on the volume traded as well."

The numbers that the local stock market manages these days are eloquent:

"In April, an average of US $ 4.3 million per day was traded in local shares

, when in 2019 the average was US $ 16.4 million per day, and in 2020 US $ 8.9 million per day, "said Santiago Abdala of PPI.

Alternatives

The decline in investor interest in the shares of local companies was accompanied by new investment alternatives. "While Argentine stocks have not stopped falling in the last three years,

Wall Street stock indexes have soared

. The perception for the Argentine investor is that

there are good opportunities in the equity market, but abroad,

" said Bano. "During this period, the

operations with Cedears

were greatly simplified

, which allows investing in foreign assets in pesos from the local stock market and also the options to invest directly in the New York Stock Exchange," Bano said.

At this point, Abdala agreed: "In the

last 18 months

, our clients' demand for solutions that cover international assets has been growing steadily".

Pablo Haro, from the SBS Group, explained: "In the last months

of every $ 100 traded in variable income, approximately $ 70 corresponded to cedears

and $ 30 to local shares". For the specialist, this growth is closely related to two factors. "On the one hand, the wide range of international shares that can be acquired through the cedears program, which makes this instrument more attractive by allowing it to build a highly diversified portfolio. In turn, this would not be possible without the presence of the robots that are permanently arbitrating the squares and granting liquidity to the market, "said Haro.

The demand for these instruments still seems to have no ceiling.

"Going forward, we believe that the trend in volume growth will continue to consolidate. As investors become aware of the advantages and opportunities of investing in international companies, they begin to have greater confidence and greater predisposition to increase exposure to cedears within their investment portfolio, "added Haro.

Buying opportunity?

Despite the

notably lower prices

of Argentine companies, investors who have exited in recent years

are reluctant to re

-enter the local equity market. "The political and economic uncertainty in the country has been generating a significant

aversion to Argentine risk

, which is impacted on the volume of business of the Leader Panel. Local stocks are at extremely low levels, which although in the long term could have an important upside, short, the

absence of immediate drivers and a "health gap"

significant with the more developed countries generates that many investments go towards foreign securities ", explained Lucas Yatche, Financial Advisor of Liebre Capital." Beyond the fundamental analysis of the different titles, the recent performance of Argentine assets and the expectations towards future damage to the levels of operations, "he added.

Look also

What can happen to the dollar, soybeans and the exchange gap until the elections

Amid pressure on Martín Guzmán, the blue dollar rose to $ 154

Source: clarin

All business articles on 2021-05-06

You may like

News/Politics 2024-02-15T09:52:01.059Z

Trends 24h

Latest

© Communities 2019 - Privacy

The information on this site is from external sources that are not under our control.
The inclusion of any links does not necessarily imply a recommendation or endorse the views expressed within them.