LOCAL STRATEGY
Uncertainty regarding Alberto Fernandez’s possible economic actions, mainly about the relationship with the IMF continues, following his statements after his meeting with the IMF’s representatives. Even so, we believe that, at current prices, certain stocks trade at attractive entry points. Although, we suggest eliminating exposure to utilities, due to higher regulatory risk and possible tariff freezing. Companies with a high percentage of dollar denominated revenues, lower operating exposure to domestic market and low debt levels would act as a hedge in the current scenario.
Following the sharp decline post primaries, the high volatility scenario continues, due to uncertainty about Alberto Fernandez’s possible economic actions. Uncertainty about debt repayment and rumors about a possible debt restructuring triggered significant cash outflows, reducing exposure to Argentine securities. We suggest reducing or eliminating exposure to companies operating in sectors that may suffer tariff freezes, particularly those in the natural gas and electricity sectors. The next step could be reducing exposure to Aluar, Ternium and San Miguel due to their outperformance, migrating to CEDEARS with limited exposure to Argentina, such as MercadoLibre and Globant.
Highlights
- The Merval Index dropped 14,99% during the last 7 days, in line with international markets.
- Companies in the Materials sector were the best weekly performers.
- Banks was the worst performing sector.