Despite the exchange rate uncertainty and inflationary acceleration, May was a good month for Argentine investors, especially for those who bet on the stock market. The Buenos Aires stock market ended the fifth month of the year with a rise of almost 15% in pesos – the dollar counted with liqui rose 8.7% – and accumulates a rise of 69.3% since the beginning of 2023. There were Merval-listed stocks that rose more than 34% and general panel shares that rose more than 70% this month alone.
On the bond side, despite growing volatility, which is exacerbated by the approach of the midterm elections, dollar fixed income instruments ended the month with yields of more than 10%.
After the exchange rate turbulence at the end of April. The dollar market was more "stable" in the fifth month of May. By dint of controls, raids, new obstacles to the stock, among other measures deployed in the last 30 days, financial dollars ended with a jump that is aligned with projected inflation: an 8.5% monthly increase for the cash with settlement and 7.1% monthly for the MEP dollar.
Meanwhile, the Central Bank let the wholesale dollar run at a monthly pace of 7.6%, the highest since August 2019.
Maximiliano Donzelli, from Invest On Line, said: "In another month that was marked by the volatility of financial dollars and uncertainty as the presidential elections begin to approach. Despite all that, May ended up being very positive for the local financial market."
Donzelli highlighted: "In line with what was happening in the previous months, the Merval registered a positive variation of 14% in May to reach the level of 340 thousand units." The rebound of the Merval was also considerable if measured in dollars, at spot prices with settlement. In this case, the rise was 5.8% this month and accumulates a gain of more than 18% since the beginning of the year.
"Once again, the levels reached by the index with a country risk that flirts with 2,600 points is striking. At this point it is worth asking if it is still due to the Massa effect or is already beginning to play the electoral trade, "said PPI analysts, who added that these days the market experienced "a little more clarity regarding some of the fronts that the Minister of Economy is working to increase reserves in the BCRA could be key to see an additional push. "
However, the market is not optimistic about the future of the shares of Argentine companies. The balance sheet season ended last week. In general terms, the flow cycle of Argentine companies still remains stable, some of them maintaining some growth, although leaving in evidence the economic slowdown, "they said in Delphos.
In the consultancy they warned: "However, we expect the results to reverse and the balances to turn negative for the second half of the year and the first of the next, as a result of a greater impact of the negative dynamics of local economic activity."
With some variations throughout the month, the country risk ended at around 2,555 points." During May, dollar-denominated bonds ended with recoveries measured in pesos and also in parities, along the entire yield curve, with increases that averaged almost 14%," reported Tavelli y Compañía.