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The surplus is no longer enough: the obstacles in the negotiation due to the Bases Law had a negative impact on the market - Infobae
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El superávit ya no alcanza: las trabas en la negociación por la Ley de Bases repercutieron negativamente en el mercado
Bonos y acciones anotaron ayer marcadas bajas, en la primera jornada tras la masiva marcha universitaria y las complicaciones que enfrentó en el Congreso el oficialismo para avanzar con la reforma laboral
www.infobae.com
April 25, 2024
Bonds and shares recorded marked declines yesterday, on the first day after the massive university march and the complications that the ruling party faced in Congress to advance with the labor reform
File photo: Traders observe the screens with quotes on the Buenos Aires Stock Exchange in the financial center of the capital of Argentina. February 26, 2020. REUTERS/Agustin Marcarian
It's now or never. “It is dealt with now or it will not be dealt with anymore.” The phrase belongs to the radical deputy Rodrigo de Loredo, who late yesterday was summarizing what happened during the day in Congress regarding the labor reform and which the market monitored during the day with extreme attention. The fact is that investors and analysts who closely follow the outcome of Argentina's economic crisis share De Loredo's view. For this reason, when in the middle of the day statements were made by the leader of one of the legislative blocs, deputy Miguel Pichetto, rejecting the project that was beginning to be discussed, the market reaction occurred in real time.
The bonds, which the previous day had already corrected part of Monday's rise, motivated by expectations that were never confirmed about the content of the President's national channel that night, fell again and, at the close, the decline was 3 % on average. The bad day was accompanied by Argentine stocks listed on Wall Street, which also closed mostly in the red. Part of that reaction was attributed, predictably, to the impact generated by the massive university march, the first “street” reaction to the Government's policies.
But the main focus is on the package being discussed in Congress, in a second attempt after the failed Omnibus Law of the summer. These projects are considered the acid test for the Government of Javier Milei. His approval would imply, at least from the market's perspective, a demonstration of the ruling party's ability to advance the reforms it promised. It is even an essential milestone to also take negotiations with the Monetary Fund to a new level. The level at which fresh money is disbursed within the framework of a new agreement, which would make it easier to lift the exchange rate and thus contribute to economic recovery along with the impact of “pro-growth reforms,” as defined in a recent report by the Bank. of America to the package of laws in Congress.
“It is time to negotiate,” stated the North American bank, something that late yesterday was the slogan for the ruling party, which was finally able to unblock the disagreements over the labor reform.
Pichetto's threat not to approve the labor reform deepened the market's fears. (Gustavo Gavotti)
“The approval of the fiscal package and the Base Law will surely mark a new rally in the market, the assets still have a lot to gain if the perspective is that the fiscal adjustment can be consolidated. But for the labor reform to pass would be euphoria ,” highlighted a senior executive of a bank, with a wide portfolio of large companies but also SMEs. “It has been more than 20 years since we have been able to make progress on this, it would be historic,” he enthused.
Abroad, predictably, the issue is also important but the main focus for foreign investors is the tax front. That is why the data from the public accounts, which showed a financial surplus in the first quarter, are so well received. This despite the objections that are reproduced regarding the sustainability of this adjustment. Precisely, the view from the outside is that the fiscal package and the reforms of the Base Law provide consistency to an adjustment that, for now, was largely based on the liquefaction of pesos.
“We see room for an agreement on the Omnibus bill (for the Bases Law) and the fiscal pact with the governors to consolidate the adjustment, including the tax moratorium, incentives for large investments, privatizations and delegated powers,” said Sebastián Rondeau. in his report to BofA clients. The marches and countermarches in Congress yesterday tested that optimism, which will surely go through new days of tension in the coming weeks.
