Argentine Markets Rise Amid IMF Review, Wall Street Rally

Optimism tempered by economic concerns.

Argentine stocks and bonds saw gains, buoyed by a Wall Street surge ahead of the U.S. holiday and expectations surrounding the International Monetary Fund’s (IMF) first agreement review. However, analysts urge caution amid economic uncertainties.

Market Performance

The S&P Merval index increased by 0.7%, marking its third consecutive advance. Metrogas shares led the gains with a 5.7% increase, followed by Transener (+5%) and Gas Transporter del Sur (+4.%).

Argentine ADRs on Wall Street also experienced gains, climbing as high as 3%, with IRSA (+2.9%), Pampa Energía (+2.7%), and Southern Gas Transporter (+2%) leading the way.

The Dow Jones Industrial Average rose 0.77%, reaching 44,828.53 points. The S&P 500 gained 0.83% to 6,279.35 points, setting a new record, as did the Nasdaq Composite, which appreciated 1% to 20,601.10 points.

Expert Opinions

According to Rafael Di Giorno, director of Profession Investment, the Merval’s recent gains may not indicate a solid recovery. He suggests the second semester’s outlook depends on international factors and local economic variables, noting, “The market pays close attention to the purchase of BCRA and the electoral dollars.”

Similarly, Alan Mac Carthy, CEO of Front Investments, sees the energy sector as promising, especially with potential electoral changes. He highlighted TGS and Pampa Energía, stating they have solid financials and exposure to Vaca Muerta, offering valuation opportunities if the macro environment stabilizes post-elections.

Economist Gustavo Ber noted that strong payroll data propelled Wall Street to new highs, even amid dollar adjustments, positively affecting domestic assets.

IMF Assessment

The IMF reported that discussions with Argentina regarding the first review remain “very productive” but did not provide specific details from recent meetings. Julie Kozack, a spokeswoman for the organization, stated, “The transition to a stronger exchange regime has been fluid, the disinflation process has resumed and the economy continues to expand. High frequency indicators suggest that poverty follows a downward trend in Argentina.”

On a related note, the World Bank forecasts a modest 2.7% GDP growth for Argentina in 2025, contingent on continued reforms and fiscal adjustments (World Bank).

Concerns and Caution

Economist Juan Carlos de Pablo, who is close to president Javier Milei, acknowledged the positive impact of the U.S. and China trade war pause. He also highlighted the upcoming IMF review, emphasizing the importance of understanding the GDP situation of member countries.

Investors are reportedly acting cautiously, considering negative news such as MSCI’s rating stagnation, the unfavorable YPF expropriation ruling, and JP Morgan’s advice to exit “carry trade” strategies.

Bond Market and Country Risk

Argentina’s dollar-denominated bonds saw increases, particularly the Global 2046, which rose by 1.1%. The country risk remained near 700 units, consistent with the previous days.

JP Morgan suggested that emerging market bonds have more potential for recovery than decline, assuming global recession risks remain controlled.

The Central Bank (BCRA) placed just US $26 million in “Bopreal 4” bonds, designed for import payments, bringing the total awarded to US $836 million out of an expected US $3,000 million.