Argentine ADRs Jump Up to 7% on Wall Street on Labor Reform Optimism
The government is positioning itself to secure approval of the reform and move forward with labor market liberalization.
Quick overview
- Argentine equities rallied significantly, with the S&P Merval rising 4.3% amid ongoing labor reform discussions.
- Dollar-denominated bonds declined, with losses up to 1.3%, while country risk remained elevated at around 524 basis points.
- The Chamber of Deputies is set to vote on a controversial labor reform proposal, which has sparked a nationwide strike by opposition groups.
- Local equities saw gains led by Grupo Supervielle and Grupo Financiero Galicia, while some stocks like Aluar experienced declines.
In a session shaped by the congressional vote on labor reform, Argentine assets traded unevenly: equities rallied, while bonds moved lower.
Markets were selective on Thursday, driven by negotiations over the labor reform bill in Congress and a nationwide strike. Moving against the S&P 500 and broader global markets, Argentina’s dollar-denominated S&P Merval posted its best session of February. However, dollar bonds declined and country risk remained above 520 basis points.
The Chamber of Deputies is voting this afternoon on a controversial labor reform proposal promoted by President Javier Milei, which triggered a 24-hour general strike called by opposition groups. The government is positioning itself to secure approval of the reform and move forward with labor market liberalization.
The bill, which was approved by the Senate last week, is expected to be amended in the lower house—requiring a final ratification by the Senate. The reform has the backing of the ruling coalition and allied blocs. Against this backdrop, the S&P Merval rose 4.3%, rebounding from a 3.3% drop in the previous session, which had reflected adjustments after the long Carnival holiday that kept markets closed earlier in the week. Its dollar-denominated counterpart also climbed 4.3%.
Local equities posted gains of up to 6.7%, led by Grupo Supervielle, followed by Grupo Financiero Galicia (+6.5%) and Sociedad Comercial del Plata (+5.7%). On the downside, Aluar fell 2.9%.
Argentine ADRs in New York also advanced broadly, rising as much as 7%, driven by Grupo Supervielle and Banco Macro, followed by Grupo Financiero Galicia (+6.4%) and Pampa Energía (+4.7%).
Bonds and Country Risk
Dollar-denominated bonds traded lower, with losses of up to 1.3% led by the Bonar 2041 and Bonar 2038 (-1%). In this context, country risk hovered around 524 basis points. The market is still waiting for signals that would allow a renewed convergence of Argentina’s yields toward regional levels.
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