Only 48 hours after the end of the famous G20 summit in Buenos Aires – It had concluded with an alleged commercial ceasefire between the US and China and a bullish spike in shares the day after- Wall Street fell down: Industry indexI dow Jones dropped 799 points one day and closed the week almost 1500 points down. the Nasdaqthat Tuesday, December 4, fell -3.80% and S & P500 -3.22%.
The background and the Argentinian papers
For lack of confidence in US-China truce, aggravated by the arrest of the exercise of HuaweiWall Street also fell on Thursday in the same week – there was no operation in the US on Wednesday – though dampened a late rebound in technology storage, following declarations from regional presidents of the Federal Reserve.
But the next day, the three main indices closed again with a significant fall. This Monday deals in the US they had a small tip after these days. Nevertheless, Dow and Nasdaq maintained profit margins year-on-year (respectively + 0.42% and + 2.6%), but not the index for 500 large listed companies (S & P500) with -1.83% per annum.
In this way Last week's was a new descendant peak that accompanies them in October and February. On October 10 this year, Wall Street had its worst fall since February, Nasdaq had its worst value since June 2016 when it was Brexit. On February 5, 2018, Dow Jones had slightly the biggest drop in points in its history with a decline of 1,175.21 units.
The shares called ADR are listed on the New York Stock Exchange (NYSC) and in Argentina, but it is the same asset. In other words, the same company is quoted only in two places, and the difference is the price adjusted by the exchange rate. EFE / Justin Lane
In that connection, they had Argentinian papers in New York (ADR) in the first week of December (from Saturday 30 November to 7/12) mixed returns. In some cases, loss of up to almost 9% managed as Corporación América. Tenaris, for example, that week closed at -6.1% (they are companies associated with the scandal of notebooks). From the green side, Transportadora appears Gas del Sur (TGS), which accumulates + 3% so far this month. But if the percentage is considered in the year, the numbers are lowered: fall into actions like Supervielle, reaching 70% below.
What are side effects?
The actions called ADR are cited in New York Stock Exchange (NYSC) and in Argentina, but it is still the same asset. In other words, the same company is quoted only in two places, and the difference is the price adjusted by the exchange rate.
"In the last two weeks, the Argentinian SARD, except in exceptional cases, had a positive performance even in the midst of the reversed turn of the war. Thus, stocks such as TGS and Galicia have been at least on the sidelines of the recent Wall Street fall. They well defended the coming and goings between Trump and his Chinese couple. On the other hand, in the case of acts committed in legal cases such as Tenaris, Ternium and Loma Negra, have hit the attacks of the potential derivatives of the judicial escalation and still see a high level of uncertainty"He says bugle Emiliano Wach's leader of research by the broker Alchemical values When analyzing until the end of last week,
Wachs, however, differs with regard to the annual card in ADR: "The fall of 70% of some papers and of the market in general so far has to do with the deterioration of local macroeconomics, with an expected fall in GDP of between 2.5% and 3% and with a government that may go out and request the IMF for funding to close its financial program after the financial markets for our country were closed. To this adds a mega-devaluation, inflation rise and doubts about continuity of change next year".
Only 48 hours after the end of the famous G20 summit in Buenos Aires – concluded with a presumably commercial ceasefire between the United States. and China-Wall Street fell: Dow Jones Industrial Average dropped 799 points in one day. The market doubts the agreement. REUTERS / Kevin Lamarque / File Photo
Jorge Neyro, from the ACM consulting firm, contributes to his appearance: "Wall Street shares fell close to 3% two days last week, due to the renewed tensions between the United States and China. the flattening of the US government bond yield curve, which could indicate a recession in the North American economy's horizon. In this context ADRs have lost much of their earnings after the G20. Similarly, some companies were influenced by new news about the cause of notebooks and potential investors' claims for losses in the contributions. "
For Neyro, ADR's fall in the year has been to a number of local and external factors: "In the external markets there is a lot of volatility, but the Argentinian crisis and the legal problems have a major influence". Although Merval and the ADRs are usually linked in many stocks, the only difference is that they are quoted in pesos or dollars and that bonds are another form of asset, Neyra considers that "Both stocks and bonds are down if there is much reluctance to argentine risk as it happened during the year's crisis."
The commercial war
The landslides in the United States are at the forefront of technology. The actors, the calls FAANG Shares (Facebook, Apple, Amazon, Neflix and Google's parent company, Alphabet) draw sharp drops to their highest peaks of the year: FB (-35%), Apple (-27%), Amazon (-18%), Netfilx (-35%), Google (-18%).
Amazon came to rise more than 70% through October. So, so far, it fell more than 18%. (AP Photo / Mike Stewart, File)
Why did they fall? It is already impromptu the commercial war, that is, the Chinese imported components that affect some companies in this series like Apple or Amazon, but it also affects the business model framework of many US companies. The analysts, however, They introduce other elements such as the year's growth, such as Amazon, which increased by over 70% until October.
The enthusiasm after the G-20 summit was diluted with the days. Robert Lighthizer, Secretary of Foreign Trade, was appointed head of the group of American dealers, a decision fell well, as it is known for its frontal criticism of Beijing's trade policy. Larry Kudlow, Trump's top financial adviser called for "cautious optimism" about ceasefire.
Perspectives on ADR
-What perspective do you see in fines in connection with renewed tension between the US and China and internal factors, such as About cutlery books?
"There are papers where there is value and in the case of TGS or CEPU (Central Puerto). But the reality is that in addition to the tension between the United States and China, the question is about the polls (…). With everything After the decline in Argentine assets during the year, we believe that the impact of foreign factors is today marginal, and we see this short-term decoupling between medium and long-term bonds and Argentine shares, where it still needs to be defined if the shares will give the land or if the bonds and land risks return to the level a month ago, "says Emiliano Wachs.
The enthusiasm after the G-20 summit was diluted with the days. Robert Lighthizer, Minister of Foreign Affairs, was appointed as the head of the American retailers group, a decision fell well, as he is known for his incredible criticism of Beijing's trade policy. (Photo by Jim WATSON / AFP)
Literally speaking, The spread between Global 2021 and Global 2019 already exceeds 600 basis points. The first has an IRR (yield) of the order of 10.7%, while the global 19 gives 3.73%. In this differentiation, that is, the higher the yield, the higher the risk assessment, the market uncertainty will be seen in 2019. For its part, this Monday, the ADR has returned to trade negative in case of more than 5%.
"Difficult to predict it"Neyro concludes about the perspectives on the argentine papers in New York. "In the medium term, if the Argentine economy grows again with lower volatility in the exchange rate, they can show profits again. PBut the factors you mention – commercial war, legal situations – can continue to affect".