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Dollar Down: What Was the Best Investment in November and Where to Look in December

2023-12-01T16:58:16.460Z

Highlights: The Merval index of the Buenos Aires stock exchange had a jump in the month in dollars of 39% measured in spot with liqui. The most notable returns came from the banks' side, with Supervielle leading the way, with a 100% jump. The AL30, the most traded stock, rallied 40.9% in November. Going forward, IOL's recommendation is to target papers linked to agriculture and the energy sector. For those looking to dollarize, we found Cedears with good fundamentals.


The Merval had the biggest one-month gain since 2019.Bank shares rose as much as 100%.


In November, the financial market was marked by the election result and the change of government. With alt dollars on the decline, bonds and stocks became the stars of the month.

In November, financial dollars were down around 5%. The confirmation of Javier Milei's triumph and his move away from extreme positions such as dollarization cut the overreaction that currencies had had in the first part of the month and made them close below $900.

At the same time, the expectation of the change of government gave a new impetus to the stock market segment. The Merval index of the Buenos Aires stock exchange had a jump in the month in dollars of 39% measured in spot with liqui. The most notable returns came from the banks' side, with Supervielle leading the way, with a 100% jump.

"The Argentinian market has just recorded an exceptional month with very positive returns, in line with the great reaction of Argentine ADRs in New York, who reacted well after Javier Milei's victory was announced," says Máximiliano Donzelli, Head of Research at IOL investonline.

The specialist clarifies that despite the fact that the "Milei effect" weighed heavily on the rise of the Merval, "it should be noted that it had lagged behind other Latin American indices. The Merval and the Bovespa maintain a close positive correlation, although the Merval has higher volatility. Prior to the election, the flow had accompanied Brazil's index, and the local index was lagging behind awaiting the election result. Therefore, the international flow reflected in the rise in ADRs had two catalytic events."

Among the notable increases are Telecom with 78%, Cresud with 62% and YPF with 60%.

Argentine bonds also had a notable rally, withaverage yields of 28.3% in hard currency. The AL30, the most traded stock, rallied 40.9%

"In the event of meeting the goals proposed by the IMF and giving market-friendly signals for next year, as promised in the Milei plan, it does not seem unreasonable that parities will continue to rise in a context where yields may continue to compress to country risk levels of countries similar to those with lower interest rates than Argentina. such as Ecuador," says Donzelli.

What's Next

Going forward, IOL's recommendation is to target papers linked to agriculture and the energy sector.

"These are two sectors that are of fundamental importance for the future of the country, which can provide foreign exchange income that will be needed for the next term. Along these lines, the three local assets that we suggest under this premise are Cresud (CRES), Pampa Energía (PAMP) and Central Puerto (CEPU)."

"For those looking to dollarize, we found Cedears with good fundamentals," Donzelli concludes.

Source: clarin

All business articles on 2023-12-01

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