GDP coupon the best of September with INDEC help

Portada en Ingles

Dollar-denominated coupon, New York law, and gold, with 10-per cent yields, were the best investments of September. Behind them, we find Argentine sovereign debt bonds, which posted significant rises, but just because they had sell-off prices at the beginning of the month, when they had reached two-year-ago values.

In August, Argentine instruments had lost more than 10 per cent and, despite this price rally in September, they are still almost 20 per cent down so far 2007.

For their part, stocks, with up-6-per cent rises, settle at levels posted at the beginning of August. Last month, they plunged more than 5 per cent and they hit 4.66 per cent up in the year.

Hopes

Gold keeps on cherishing hopes, which had climbed almost 3 per cent in August, while adding 9.86 per cent in September. This metal has become good shelter for investors, not just for being a safe asset, but also because it develops opposite to dollar price. The more the American currency falls, the higher gold climbs. The same happens with euro, which soared more than 5 per cent last month and it keeps on moving forward after new records.

Rally of GDP coupons, which are attached to debt swap bonds, can be explained by their low prices and by the fact that they are not affected by Argentine Statistics and Census Institute (INDEC, in its Spanish acronym). On the contrary, as they adjust by economy growth, INDEC is tempted to measure it upwards, since it helps government image during an electoral period.

Tension

However, bonds did not end September quite well, despite favourable balance. Great tension is observed among investors. Mendoza scandal, Argentine Cabinet Chief denying inflation and the way in which Argentine presidential candidate Cristina Fernández dodges the matter offer no peace to bondholders. Many of them are waiting to make a decision. They do not want to rush, since we are talking about a mass of at least $7 billions in private hands, which will knock down values if deciding to leave. Bond drop increases yields, which in turn pull interest rates. Therefore, damages would be really serious.

Although dollar plummeted 0.63 per cent in the month, small- and medium-sized savers keep on buying them, since, despite fixed-term rate yields almost 1 per cent monthly, they feel they lose against real inflation. The great boom now is euro. It's held in portfolio together with dollars. The difference between them is the spread, since the gap between purchase and sale of euro is greater than dollar's.

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