LOCAL STRATEGY
The electoral scenario is somewhat clear as the electorate would be divided into two: center left and center right, which would be almost binary, continuing to generate uncertainty until the primaries take place. Although investors are now assigning a greater probability of a more favorable scenario to the Government, as volatility remains high, we do not recommend increasing exposure to domestic stocks.
Companies with low debt in dollars and hard currency denominated revenues would be the most benefited. In addition, companies with high dividend yields would also experience lower volatility. At current prices, certain stocks remain with very attractive valuations, such as Ternium (TXAR) and natural gas distribution companies, especially Distribuidora de Gas Cuyana (DGCU2).
Highlights
-The Merval index fell 6.1% during the last 7 days, in line with the developed markets’ trend.
- Agribusiness companies were the best weekly performer.
- Financial companies were the worst performers.
- Merval Argentina Index Control Board.