Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Analysis-Argentina's markets are flying (yes, you read that right)

EconomySep 01, 2021 06:42AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
2/2 © Reuters. A man walks past Argentina's Central Bank in Buenos Aires' financial district, Argentina September 24, 2020. REUTERS/Agustin Marcarian 2/2

By Hernan Nessi

NEW YORK (Reuters) - Argentina's notoriously shaky stock and bond markets, which have been hit by years of economic crises, are rocketing again.

The country's S&P Merval stock index is up almost 30% in dollar terms this year, one of the best performing stock markets in the world, with most of those gains since a nadir in March-April. Sovereign bond prices, rooted in distressed territory for years, have jumped over the same period.

The sharp rise has picked up pace in recent weeks, driven by positive noises around $45 billion debt talks with the International Monetary Fund, local bond revamps bearing fruit and investors eyeing positive outcomes from midterm elections.

Analysts say the outlook for investors in South America's second-largest economy is starting to clear after depleted foreign reserves have started to trickle back and COVID-19 cases are dropping steadily allowing restrictions to be eased.

The important Buenos Aires province sealed a $7 billion debt revamp this week after a sovereign restructuring last year.

"The post-restructuring payment outlook looks clear in years ahead, the economy is recovering, the central bank seems to have stabilized the exchange rate and slowly recover reserves," said Sabrina Corujo at consultancy Portfolio Personal Inversiones.

"We are clearly not in the best of scenarios - or close to it - but we're not under the shadow of default."

The stock index hit a record high this week before taking a breather on Tuesday and is up some 7% in the last week. The Argentine stock market, with a market capitalization of $26 billion, is dwarfed by larger peers in Brazil and Mexico.

Argentina stocks rocket

The over-the-counter bond market is up on average 5.7% in the last seven trading sessions. A 2030 bond and 2038 bond are up 10% and 17% since lows in March. And upsides remain despite the country's well-known perils.

"Investors and trading volumes have increased, with abrupt increases in the short term. Argentine assets are still undervalued, but the risks are many," said one banking analyst.

Argentina has strict capital controls in place that limit access to dollars, which has put a dampener on corporate issuance of foreign debt, and the government needs to revive the economy to be able to meet future debt payments.

Aldo Abram, economist at consultancy Libertad y Progreso, said the Buenos Aires debt deal after over a year of tense talks was a "positive" signal, while the IMF releasing some $4.3 billion in Special Drawing Rights (SDR) to the country helped relieve repayment worries this year.

"Now we have the payments (to the IMF) covered," he said.

Positive murmurs about talks making headway over a new IMF deal have helped too, while external factors, including a more dovish stance from the U.S. Federal Reserve, have propped up emerging markets more widely.

Argentina bond bounce

Others said that upcoming mid-term elections in November were likely to dent the Peronist coalition that has taken a popularity hit during the pandemic, potentially tempering the more radical wing of the ruling party.

"The result will be crucial to forcing consensus that will allow post-election strategies to address fiscal and monetary issues, as well as stabilizing divergent currency exchange rates," said Gustavo Ber from Estudio Ber.

"It's also key to an agreement with the IMF to refinance payments."

Analysis-Argentina's markets are flying (yes, you read that right)

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
Romão Filipe Gaspar
Romão Filipe Gaspar Sep 01, 2021 6:39AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email