Gloomy November: savers lose with bonds and stocks

November investments

Argentines have no place where to save without seeing inflation withdrawing part of their money. For that reason, they bring forward consumptions, motorizing greater inflation, or they buy dollars and euro. November investment ranking shows that the only assets rising were euro and time deposits. However, we should pay attention to these data. Although the European currency climbed 2.5 per cent, we should deduct purchase-and-sale cost (gap between both prices), having as a result almost null profits.

Meanwhile, time deposits, despite offering an appealing 1.25 per cent annual, do not attract investors because they believe they are quite lower than real inflation.

Argentine administration has made a serious mistake by rigging figures of Argentine Statistics and Census Institute (INDEC, in its Spanish acronym), because now all savers estimate which is the level of inflation. In order to protect themselves, they overestimate it and, in their imagination, price hike percentage is higher than the real one. For that reason, time deposits are sliding and cash moves to current accounts.

Dollar, despite having lowered, keeps on being Argentines' favourite saving, during a moment in which they have no other place where to put their money. Debt bonds have been ruled out. During the month, they have caused great pain to everyone, included government, which placed money of the Argentine Social Security Administrative Bureau (ANSES, in its Spanish acronym) in these instruments. Likewise, neither Retirement and Pension Funds Administrative Bureaus (AFJP, in its Spanish acronym) managed to escape from collapse. Government forces them to invest in bonds doomed to failure due to INDEC data juggling. Such fate will extend as of December, with the new price index which leaves aside a large amount of key goods. It will only measure a handful of goods which government will keep under control. The problem is that these state-controlled products only exist virtually, not in shops.

Debt swap bonds headed November decline. Only Venezuelan instruments fell as much as Argentina's. Par in pesos lost more than 10 per cent, while its series in dollars plummeted 9 per cent. Discount, another important swap bond, crashed more than 7 per cent in pesos and in dollars.

Post-default bonds in domestic currency were also victims of US crisis and INDEC. Their losses went as far as to go beyond 7 per cent. Stocks had a dreadful month, where oil firms' instruments were knocked down by government's decision to increase export tariffs as well as banks' because, when bonds plummet, their profits plunge, later mirrored in balances.

All emerging countries had a bad time, Argentina was the worst. Brazilian bonds dipped less than 1 per cent. Venezuelan instruments from Argentina stumbled more than 10 per cent. Venezuela has not dared yet to rig price index and has an almost 20-per cent annual inflation.