LOCAL STRATEGY
Following the tightening of FX controls, domestic securities continued falling reflecting significantly weaker economic conditions. 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.
Uncertainty about debt repayment and possible sovereign 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, while banks would suffer most due to the short term debt restructuring and FX controls. We favor defensive stocks such as Aluar, Ternium and San Miguel, also migrating to CEDEARS with limited exposure to Argentina, such as MercadoLibre and Globant. Corporación América Airports (CAAP) also stands out due to its reduced exposure to local macroeconomic risk, and high percentage of dollar denominated revenue.
Highlights
- The Merval Index hiked 6,45% during the last 7 days, as opposed to international markets.
- Companies in the Industrial sector were the best weekly performers.
- Holdings was the worst performing sector.