Few days remain before the primary elections take place, and volatility is expected to continue in the local market, now also affected by the global context. A positive result for the ruling party could generate a greater rally in stocks, especially in cyclical sectors and in the most undervalued ones. The result is still uncertain, so we recommend having a conservative stance.
In the wake of the primaries (PASO), the difference in votes between the ruling party and the Fernández-Fernández formula will be the factor which will drive the market in the near future (see suggested portfolios below). Risks continue to be high given that the polls propose very different scenarios. The possible freezing of tariffs and the intervention on the FX market continue to be the most relevant when thinking about the reaction of the different economic sectors.
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).