INFORME DE CARTERA: JUNIO 2021

ECONOMIC AND FINANCIAL ANALYSIS

Argentina continues to battle the pandemic in a context of very high uncertainty about the pace of vaccination. the pace of vaccination. Effectiveness and results are questioned. The appearance of the Delta variant Delta variant and its possible spread in Argentina augur a worrying scenario for the future. A of our population is vaccinated with at least one dose, compared with neighboring countries such as Chile (65.5%) and compared to neighboring countries such as Chile (65.5%) and Uruguay (63.6%), we can see the inefficiency of local management. Only 8.76% (3.96 million people) of the population has the two doses necessary to generate sufficient antibodies and reach the required level of vaccination. generate sufficient antibodies and achieve the highest percentage of vaccine efficacy. Today Today, our country is in eighth place in the number of infections with 4.42 million, up one place from the previous month. one place in relation to the previous month and surpassing countries such as Italy and Spain. After quarantine, the number of daily cases has been reduced from a peak of 41,000 to the current level of 41,000. to the current peak of 41,000 to around 20,000. However, fatal cases are still at very high levels due to the fact that the However, fatalities remain at very high levels because the percentage of the population fully immunized is very low.
The economic problems are not minor. Inflation is not letting up and has become almost a structural problem. structural problem. The May price index showed a monthly variation of 3.3%, which was below April's variation (4.1%). was below the April variation (4.1%). So far this year, retail inflation has risen by 21.3%, which is accumulated an increase of 21.5% and in the last 12 months the variation is 48.8%. Monthly inflation is running at an annualized rate of 48%, while the annualized rate of cumulative inflation over the last five months is 48%. accumulated inflation rate in these five months is 61%. Core inflation was above, with a monthly increase of 3.5%. a monthly increase of 3.5%, which indicates that retail prices are moving at an annualized rate of between 50%/60%. of between 50%/60% per year. Among the items that increased the most in the last 12 months are clothing and footwear 70%. clothing and footwear 70%, transportation 60% and food almost 50%. And among the items that the lowest increases were in housing, water, electricity, gas and other fuels 26.3% (all of these services with subsidized rates). these services with subsidized rates). For the moment, the only tool that the government has resorted to in an attempt to to try to slow the rate of price increases is the exchange rate delay. The rate of The rate of increase of the official exchange rate went from 3.8% per month in January to 1.2% per month in June, accumulating an increase of 12.5%, while the accumulated inflation rate up to June, annualized annualized inflation rate would be running at 52%.
This could start to be a major problem for the external accounts and put pressure on the trade account surplus. the trade account surplus. As the backwardness deepens, expectations of devaluation could devaluation expectations could skyrocket and generate a flight to the dollar and a widening of the exchange rate gap. widening of the exchange rate gap. The sharp rise of the informal dollar was in the news, reaching again 170 pesos per dollar, boosting the exchange rate gap. the dollar, pushing the gap to levels above 75%. We believe that this phenomenon that could have the greatest impact on prices and therefore the application of the exchange rate lag would become counterproductive. would become counterproductive. On the contrary, it would feed back into the upward price dynamics. In financial terms, the most relevant aspect was Argentina's re-categorization from emerging market to "standby" status. to the "standalone" category, below the frontier market, which was what most expected to be assigned to it. most people expected to be assigned to our country. Argentina will henceforth share the index with countries such as Panama with countries such as Panama, Trinidad and Tobago, Malta, Ukraine, Botswana, Zimbabwe, Lebanon and Palestine, among others. Palestine, among others. The prolonged severity of capital controls was what took precedence when it came to relocating the time of relocating our country within the new index.
The Managed Portfolio ended the month positive 4.45%. Our main holdings are: Galileo Event Driven (53%), Amazon (5%), Baba (5%) and FCI Dollar Linked (5%).
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