Argentina’s country risk falls to minimum since 2020 amid investor appetite

The country risk index of Argentina It fell this Monday to its lowest level in three and a half years, amid renewed investor appetite for Argentine assets.

The indicator prepared by JPMorgan fell this Monday, in the case of Argentinato 1,205 basis points, a level that has not been reached since September 2020.

In the midst of electoral uncertainty, last year the country’s risk of Argentina It had climbed to a maximum of 2,719 points in October, prior to the first round of the presidential elections.

After the victory of the libertarian Javier Milei in the November second round, the country’s risk of Argentina has been declining, but the pace of decline has deepened in recent days, given renewed investor interest in Argentine assets, with sovereign bonds advancing an average of 1% in their dollar prices this Monday.

Although emerging market assets are going through a positive streak, in the case of Argentina the recovery has been forceful since the victory of Mileiwith an improvement since then of 59% in the value of shares of Argentine companies and 67% for sovereign bonds Global.

“We are on our way to 1,000 country risk points and with that the capital markets will open again“, he assured last Saturday Mileiwho, after taking office in December, has launched a drastic fiscal adjustment plan.

Although, despite a progressive slowdown, inflation remains at very high levels and the adjustment has hit economic activity, Milei assures that it will soon be in a position to lift exchange restrictions and the economy will begin a recovery cycle.

The greatest contraction of country risk in recent days occurs in a scenario where investors renewed their bets on Argentine bonds due to better prospects due to the incipient inflow of foreign currency due to the liquidation of the Argentine harvest, an auspicious fact for the weakened monetary reserves. of the country and also for the public accounts, while the data of a new slowdown in the monthly rhythm of inflation is encouraging the expectation of a new drop in interest rates.

“As the stabilization of the macroeconomy progresses, it is possible that we will see an even greater compression of country risk, so bonds could still have a way to go. At the same time, the better macro situation and the improvement in the country risk premium also constitute positive drivers for equities.“, commented this Monday the firm Personal Portfolio Investments in a report.

According to the economist Gustavo Berthe appetite among investors “still very strong” in view of “various additional revaluation scenarios” of Argentine assets.

However, the expert pointed out that “Investor attention on the dynamics of the economy is growing, especially in relation to the sustainability of the pillars of the fiscal surplus and the accumulation of reserves”.

“It happens that being able to provide predictability through a stabilization and reform plan that has political support is key to maintaining positive market expectations and social support, as well as to extend progress in inflation and improve activity.“, noticed Ber.