Collecting in dollars and staying in dollars
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Savers collecting $800 millions for annual payment of GDP coupon have opted for not reinvesting such amount. They have kept those funds outside stocks, bonds and time deposits. Foreign context does not push them to make risky bets, less in Argentina. Yesterday, even the head of the Bank of England told in advance that bad news were not over. A sense of uneasiness reigns in Wall Street: banks are trimming their staff and nobody can perceive the end of crisis. Investing in Argentina within this context? No-one at sight.
All the same, traders believe that there are opportunities at these prices, naming a number of companies: Molinos, Tenaris, Siderar and Aluar, all with handsome profits and promising outlook for 2008.
Meanwhile, neither do banks curb stock exchange low. In this case, they are affected by sovereign bonds' weakness, which hits balance sheet's profitability. For the time being, they are not among market's favourites. Yet, they show appealing values.
In bond market, trading was poor and foreign investors' interest was almost null. Slight rise of country-risk index mirrored this: the gap between Argentine bonds and Us Treasury's made a short leap to 405 basis points (4.05 per cent annual).
In the same sense, default risk received by investors for Argentina also increased. The well-known Credit Default Swap (CDS) for a five-year term climbed yesterday 3.6 per cent to 463 points. This means that those subscribing for it pay a 4.63-per cent annual premium out of bond value so as to recover total investment if the country falls again in suspension of payments.
Some series in pesos were severely punished, like Par, which plummeted almost 2 per cent. Discount in domestic currency, the one trading the most, managed to rally slightly by closing with a 0.43-per cent rise to ARG$116.75. However, the electronic market continued trading down, with a higher than 1 per cent loss.
Another important piece of information Tuesday's session left was dollar fall in wholesale market, moving from ARG$3.142 to ARG$3.136. BCRA had to sell dollars, though a few, for the American currency to decrease slightly. The economic team states that there's no interest in "setting" dollar value some cents above those levels so as to close the year in a better manner, particularly as far as BCRA's balance sheet is concerned.