It was a complex year, marked by a surge in the dollar, falling activity and skyrocketing taxes, which added a difficult international context
This 2018 balance has been concluded for financial markets and capital markets, both international and local, leaving a bitter taste for analysts and investors.
In the first case, there are five main causes that negatively affect the evolution of the main financial variables:
1. Successive increases in interest rates regulated by the US Federal Reserve.
2. A trade war between the US and China which, outside of a number of momentary cease-fire as achieved during the G20, increases market anxiety.
3. Fear of a global economic slowdown.
4. Confrontation between the Italian government and the European Union on how to deal with serious fiscal problems.
5. The political crisis that occurred in Britain by Brexit.
Already in the national order, the negative factor chain starts at "28D", which is December 28, 2017, when the Government announces the restatement of the inflation target for the whole year, a decision has been interpreted as a loss of the independence of the Central Bank.
Then, for April, income tax was imposed on foreign investors, which caused them to dismantle the portfolio of bonds and shares, with the consequence of falling contributions, which began the process, added. the exchange seemed calm at the end of September.
To be exact, this resulted from the assumption of the new Central Bank president, Guido Sandleris, who introduced new monetary and exchange policies and, at least for now, had succeeded in easing pressure on the dollar.
With unusual sincerity from officials, Sandleris himself acknowledged that "this Government made a mistake".
"I will summarize it in two big concepts: on the one hand, underestimating the difficulty of correcting the imbalances received. In particular, I believe that we have erroneously needed consistency in the correction of supposed fiscal imbalances, resolution of the problem of inflation and correction of relative price imbalances. I also believe that some underestimate the speed at which international conditions can change", He developed.
This is a clear statement in line with the years left for investors and savers, which must go through a very complex year.
2018: winners and losers
As a result of the decline suffered in December, almost 6%, Merval ends the year with a negative balance, in the order of 29,900 points.
In short, if you compare its performance with the evolution of key variables that are always seen by investors, the results are very disappointing: in terms of the dollar, the stock market has decreased by around 55%.
Meanwhile, with a slight loss of 0.25 percent in 2018, the Merval ran well below inflation, estimated by private analysts to be almost 48 percent.
According to the calculations of Diego Martínez Burzaco, director of MB Inversiones, the Buenosairean index has reached this year historically a maximum of 1,800 points in dollars on January 31. However, the level did not last long and punched 1,000 points just before the IMF loan was approved. After the agreement, another peak of nearly 1,200 was reached but ended in 2018 at the level of 885 points.
Regarding the performance of the main actions, Petrobras is one of the few prominent papers, with an increase of 161% throughout the year.
For Tenaris, despite its weak performance in the past three months, finally closed an increase of 39% in the same period.
Much lower was TGS (32%), YPF, with 18.2% and Aluar, with a 13.8% increase.
Rubén Pasquali, market analyst, said that "from the perspective of the exchange, beyond the last-minute regression, Between elections in Brazil and rising dollars, Petrobras became a Merval winner. "
The other side of this strong increase was realized by a set of papers that showed significant losses throughout the year.
This action was led by Cablevisión, which collapsed by almost 50%, followed by Supervielle, with 44% and Metrogas (-41%).
Bonds and fixed term
Dollar-denominated papers, which combine devaluations with their prices, stand out for public securities listed on the local market.. This, despite the decline suffered by their contributions in hard currency and which is reflected in the increased risk of the country.
In that sense, the series with the best route this year is Bonar 2020, which won 76%, followed by Bonar 2024 (60.5%) and Pair in dollars, with 42%. Centennial bonds are placed below, with profits approaching 40%.
ADR and shares of Argentine companies, meanwhile, suffered a severe blow, especially those from the financial sector, in this case led by Supervielle, which lost 71.5%, followed by Macro, with 63.5% and Galicia Group, with 59.1 percent. On the other hand, the price of Corporación America fell 59.5 percent.
Regarding traditional fixed provisions, savers who choose this instrument, find performance at the order of 35%, far below 48% that retail prices rise.
In parallel, those who decide are adjusted to UVA, They managed to beat inflation based on the interest rate paid by the bank.
For Pasquali, winners and losers must be measured in part: "It is a difficult year, and gradually, it wins the level from the end of August onwards, beating all financial placements, but Those who were between the end of April and August were very hurt because they experienced two devaluations. "
In terms of the international context, emerging stock markets show a decline in the dollar in the order of 17%. Outside of the Merval landslide, the San Pablo stock market also showed negative values, as it fell by 6%.
On the side of raw materials, the key data is oil decline, more than 21%, while gold fell 2%, despite the return of the last wheel.
In terms of agricultural commodities, the record was given by corn, because its market price in Chicago rose 24%, while wheat rose 7% and soybeans rose 5%.
What's left in December
When investors start preparing for early 2019, the Buenos Aires stock market ended the last month of the year with the worst sensation, because there were only a few newspapers that made it out.
In this case, we can hardly mention Mirgor and TGN, which rose 16% and 10% respectively. They completed the Edenor table, with 5.8% and finally BYMA, which rose by 5.1%.
In the opposite direction, there is a foster an action group that in December lost more than 10%, led by Pampa, which is in the first position of this podium, with a contraction of 13%, followed by Tenaris and YPF, which averaged 11.5%.
While Ternium suffered a decline of 11% and Cablevisi fell 10%.
The poor performance that ended in December was caused by high volatility affecting the market, as well as doubts about future economic evolution and, therefore, the results of the companies that cited.
Formalization of very tight monetary policy has a direct impact on the capital market produce exodus of funds that migrate to more profitable options at least in the short term, such as Treasury Bills in dollars and which are capitalized in pesos.
On the stock and ADR side of Argentinian companies listed on Wall Street, the month's balance is also very negative, because practically all newspapers fall, led in this case by Mercado Libre, which lost 17.7%, followed by Corporación América, which dropped 17 % and Despegar, with a contraction of 16.9%.
On the side of public securities, on the other hand, a good return on "dollar-related" bonds from Kota Bs. As Class 5 2019, which rose 3.9%, and was discounted in pesos, which advanced 1.9 percent.
In contrast, dollar discounts fell 10.7%, while the pair in the peso fell 5.1%. Centennial Bonus does not have better luck, with a 4.5% decrease.
Regarding bonds, the country's risk ends the year at 820 points – it starts at 347 points – which confirms the bad evolution of long-term bonds. Incidentally, at the level of plus prices, more suffer from prices of public securities.
All of this in the context of where retail dollars move at a much lower pace than in previous months. Despite the appearance of the last wheel, it closed almost unchanged at $ 38.60. While retail inflation, estimated, will be around 2.5%.
On the other hand, the interest rate of the fixed interest rate, which once again attracts its adherents, is on average at 4%.
With this way, those who make deposits at the beginning of the month get a profit of 1.5 percentage points in terms of inflation and 2% if they compare their performance with the dollar.
What can be expected for 2019
At least for the first part of next year, everything shows that the market will continue to operate under conditions of real volatility, so at City recommend acting very carefully.
Among the points that suggest monitoring include the progress of the program with the IMF and its direct consequences at the activity level, and everything inherent in the election year.
As for what can happen with bonds and stocks, the light of hope is given by Michael Hasenstab, from Templeton Global Bond Funda, who stressed that Argentina seems ready to lead the recovery among developing countries in early 2019.
As a recommendation, the instrument chosen by analysts who consider good safety margins is Letes in dollars, short bonds in currency, and several Investment Funds (FCI).
In this case, Rafael Di Giorno, director of Proficio Investment, proposes Bonar 2020 (A020), which today generates 11% per year: "The probability of a scenario where the government feels it is difficult to roll is being overestimated" of debt. If the fiscal numbers can be balanced and BCRA decreases the level, it must recover the price. "
In parallel, Fabian Ciarlotti, ICBC's Wealth Management Head, argues that "the international market is experiencing a very important correction because of the flight to quality, that is when investors seek assets with less risk and this clearly does not support Argentina."
"As for the local level, monetary policy will continue and will keep interest rates high and there will not be many pesos on the market, with consequences on activities in general. This will calm the dollar. We expect good business from high real rates for investors, but then, As we get closer to the election, we will see portfolio dollarization progressively", complete.
To rebalance its portfolio into high-risk Argentine assets, Lucas Lainez, Puente managing partner, recommends short-term sub-sovereign bonds, with guaranteed royalties for hydrocarbon exploitation, and "quality" Obligations to Negotiate.
Meanwhile, under the premise includes several bets that are not widely evaluated today, given the specific time the market goes through, director Proficio suggested adding shares of Mirgor.
For Lucas Gardiner, director of the Inversiones Personal Portfolio, "in local scenarios, the political and economic aspects are part of the analysis to try to measure what will happen".
"This leads to the fact that outside of even economic signals, a scenario that might appear for next year is binary. As a result, assembling a financial portfolio can be very different depending on position, or expectations," said Gardiner.
"At this point, for the conservative position we recommend greater exposure in dollars, such as Letes, although assuming higher risk we believe that certain positions are attractive, Bonar 2020, which is practically guaranteed to be paid with an umbrella & # 39 ; IMF, "added the Executive PPI.
Regarding the position in the peso, and understanding that tariffs will remain high in real terms, Gardiner is leaning towards Lecaps and FCI, which according to him can be a good alternative choice for traditional fixed provisions, because today they donate a few more cost points and liquidity.
Discover the latest about digital economics, startup, fintech, corporate innovation, and blockchain. CLICK HERE