Friday , January 22 2021

Fall of Wall Street and Commercial War: How They Affect Argentine Stocks in New York – 12/10/2018



Only 48 hours after the closing of the famous G20 summit in Buenos Aires – It was over with the alleged US-China trade-off, as well as an upsurge in the next day's stock, Wall Street dropped: industrial indexl Dow Jones fell 799 points in one day and closed the week by almost 1,500 points, on Nasdaq, that on Tuesday, December 4, fell by -3.80% and S & P500 -3.22%.

The background and the Argentinean papers

Because of the lack of trust in the cease-fire between the US and China, aggravated by the arrest of the Executive of the HuaweiWall Street also fell on Thursday that week – there was no operation in the United States on Wednesday – although mitigates the late decline in technology stocks, following statements by federal presidents of the Federal Reserve.

The following day, however, the three major indexes closed again with significant falls. This Monday saw a slight leap in the US after these days. Even so, the Dow and Nasdaq retained their profit margins in the year (+ 0.42% and + 2.6% respectively), but not the 500 big companies on the stock exchange (S & P500) -1.83% per annum.

Thus, last week was a new offspring that accompanied those in October and February. On October 10 this year, Wall Street had suffered its worst fall since February, when Nasdaq had its worst value since June 2016 when it was Brexit. On February 5, 2018, Dow Jones suffered the largest drop in points in 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 the same assets remain. In other words, the same company is only quoted in two places, and the difference is the exchange-adjusted price. EFE / Justin Lane

The shares, called ADR, are listed on the New York Stock Exchange (NYSC) and in Argentina, but the same assets remain. In other words, the same company is only quoted in two places, and the difference is the exchange-adjusted price. EFE / Justin Lane

In this context, the Argentine documents in New York (ADR) during the first week of December (from Friday 30/11 to 7/12) mixed return. In some cases, they managed to bring losses to almost 9%, such as Corporación América. Tenaris, for example, closed this week at -6.1% (they are companies related to the scandal on laptops). Transportadora appears on the green side Gas del Sur (TGS), which accrues + 3% this month. However, if the percentage is projected during the year, the figures are: falls, in actions like Supervielle, reaches 70% lower.

What are ADRs?

The actions called ADR are quoted in Change in New York Stocks (NYSC) and in Argentina, but that is still the same. In other words, the same company is only quoted in two places, and the difference is the exchange-adjusted price.

"In the last two weeks, at least Argentine SARD had, except in certain cases, a positive performance, even in the midst of the reversals and reversals of the war, so actions like TGS and Galicia were at least for the moment in the sidelines of the last Wall Street Failures. They securely defended the entry and departure between Trump and his Chinese couple. On the other hand, in the case of acts committed in court proceedings such as Tenaris, Terne and Loma Nigra, have suffered attacks from potential dilemmas of the judicial escalation and still see a high degree of uncertainty"He says hunting horn Emiliano Wax Head of Broker Research Alchemical Values when analyzing it by the end of last week,

Wachs, however, differs from the ADR annual map: "The decline in 70% of some documents and the market as a whole has so far been linked to the deterioration of the local macroeconomics, with an estimated GDP drop of between 2.5% and 3% and the government that had to come out and ask the IMF for funding to close its financial program after the end of the financial markets for our country. Add to this mega-devaluation, increase in inflation and doubts about the continuity of changes in the next year".

Only 48 hours after the closing of the famous G20 summit in Buenos Aires, which ended with the alleged US trade deal. and China - Wall Street fell: Dow Jones Industrial Average fell 799 points in a day. The market has doubts about the deal. REUTERS / Kevin Lamarke / File photo

Only 48 hours after the closing of the famous G20 summit in Buenos Aires, which ended with the alleged US trade deal. and China – Wall Street fell: Dow Jones Industrial Average fell 799 points in a day. The market has doubts about the deal. REUTERS / Kevin Lamarke / File photo

Jorge Neiro, from ACM, "Wall Street shares fall nearly 3% two days last week, due to renewed tensions between the US and China," he said. the equalization of the US government bond yield curve, which could show a recession in the North American economy. In this context, The NIS erased much of the revenue after the G20. Also, some companies have been affected by new news about the cause of laptops and potential investors' claims for the loss of input. "

For Neyro, the fall of the ADR during the year is linked to a number of local and external factors: "There are a lot of instability in the foreign markets, but the Argentinean crisis and judicial issues have a strong impact." Although Merval and ADRs are usually linked because in many stocks the only difference is that they are quoted in pesos or dollars and that bonds are another kind of asset, Neyra estimates this "Both stocks and bonds are reduced if there is a great reluctance on Argentine risk, as happened during the crisis this year."

The Commerce War

The landslides in the United States have their blade in the technological. Commodity stars, calls PHYING stores (Facebook, Apple, Amazon, Neflix and Google's parent company, Alphabet) slide sharp drops to their highest peaks of the year: FB (-35%), Apple (-27%), Amazon (-18%), Netfilx (-35%), Google (-18%).

Amazon reached more than 70% in October. It then falls to more than 18%. (AP Photo / Mike Stewart, file)

Amazon reached more than 70% in October. It then falls to more than 18%. (AP Photo / Mike Stewart, file)

Why did they fall? The commercial war is already impregnated, that is, Chinese imported components that affect some companies in this series, such as Apple or Amazon, but also affect the business model framework of many US corporations. Analysts, however, They also bring other elements such as growth over the year, such as Amazon, which has increased by more than 70% by October.

The enthusiasm after the G20 summit was diluted with the days. Robert Lightheiser, Secretary of Foreign Trade, was appointed leader of the US negotiators' group. The decision has fallen well, as it is known for the frontal criticism of Beijing's trade policies. Larry Kullow, Trump's chief economic adviser, called for "cautious optimism" for the ceasefire.

Prospects for ADR

-What view do you see in the ADRs in the context of the renewed tension between the US and China and internal factors such as the notebooks case?

"There are documents in which there is value, and as is the case with TGS or CEPU (Central Puerto), but the reality is that after the tension between the US and China, the issue will be about the elections … With everything, Since the fall of Argentine assets during the year, we believe that today the impact of factors coming from abroad is insignificant, and we see this short-term division of middle and long-term bonds and Argentine shares, where it still needs to be determined whether the shares will be grounded, or if the bonds and risk for the country will return to the level of a month ago, "Emiliano Wax said.

The enthusiasm after the G20 summit was diluted with the days. Robert Lighthiser, Secretary of Foreign Trade, was appointed leader of the US negotiating group, a decision was rejected as he was known for his critical criticism of Beijing's trade policy. (Photo: Jim Watson / AFP)

The enthusiasm after the G20 summit was diluted with the days. Robert Lighthiser, Secretary of Foreign Trade, was appointed leader of the US negotiating group, a decision was rejected as he was known for his critical criticism of Beijing's trade policy. (Photo: Jim Watson / AFP)

Strictly speaking, the spread between Global 2021 and Global 2019 already exceeds 600 basis points. The first has IRR (yield) of the order of 10.7%, while Global 19 gives 3.73%. In this differentiation, i. the higher the yield, the higher the risk assessment, and the uncertainty of the market is observed in 2019. On its turn, the ADR gave up on negative trading on Monday for more than 5%.

"It's hard to predict that", concludes Neiro about the prospects for Argentine papers in New York. "In the medium term, if the Argentine economy grows again with a lower exchange rate volatility, it can again show its profit."But these factors you mention – trade war, court situations – can continue to reflect".


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