Day: August 12, 2020

Settlement effect: stocks and bonds gained up to 18% during the week

The S&P Merval rose 6.2% due to the optimism generated by the announcement of the debt agreement that Argentina reached with its foreign creditors. On Wall Street, Argentine ADRs did not show homogeneity in their variations throughout the week. The top five bullish stocks were integrated by Edenor’s papers (+16.3%); Ternium (+14.4%); Loma Negra (12.4%); Despegar (+11.9%); and Grupo Financiero Galicia (+7.1%). Argentina’s country risk, as measured by JP Morgan bank, fell 7.6% to 2,091bps during the week.

It estimates that subsidies will reach 4 points of GDP this year

Spending on subsidies promises to become a new headache in the future when the quarantine scheme has to lift. According to own projections, they could represent half of the fiscal deficit by the end of the year, which is estimated to be at least 8 points of GDP. It is basically due to the tariff freeze that will last until December in the context of the pandemic. Private reports indicate that in the first semester, they represented 2 points of the Product for almost 300 billion pesos ($4.1 bn).

Loma Negra: sales fell 30% in the first semester

Sales of Loma Negra, Argentina’s leading cement producer, fell by 30% in the first half of the year, mainly due to the drop in construction activity as a result of the coronavirus pandemic. The firm went from 22.29 billion pesos ($305.6 mn) in the first half of 2019 to 15.63 billion pesos ($214.35 mn) achieved in the same period in 2020.

The government placed more than $1.47 billion in peso securities

The Government obtained in the market 50% more than the 70 billion pesos it bid through the placement of four types of instruments with maturity between the end of 2020 and August 2023. The cash value received was 107,589 billion pesos ($1.47 bn), above the bidding and the $50 billion that expire next Thursday. 30% was awarded in Boncer with maturity between 2022 and 2023 while the other 70% corresponded to letters with shorter terms.

The BCRA’s debt securities reached a record level and are equivalent to 80% of the reserves

The need to reabsorb the excess liquidity in the financial market, due to the injection of pesos in the framework of the coronavirus pandemic, raised the Central Bank’s debt stock to a new record. The share of remunerated liabilities of the Bank, the Leliqs and the Passes, reached 2.5 trillion pesos, more than $34.3 million at the official exchange rate, again above the Monetary Base.

Unemployment rate reaches 15.5%

The unemployment rate rose from 10.4% in Q1 to 15.5% in Q2. The figure increased by 50% in three months. It is 1.09 million more unemployed. The numbers projected for a total economically active population of 19 million people. Among those who lost their jobs, 650,000 are in the informal economy.