It closed first half of 2024 also on South American markets, an always important area to monitor for trade and currency relations with the United States of America and also China. THE signals in the first six months of this year, considering the stock market indices of the main economies of the area, they are contrasting: Lula's Brazil is floundering and especially the Post-Amlo Mexico, while flew still on the wave of speculation (but not only) the Merval index of Buenos Aires.
Mexico under the lens, that's why
Let's start from Mexico, the market most under observation in recent weeks, since last June 2nd claudia sheinbaum was the first woman elected president of the Central American country. The 61 year old with an austere profile has not yet convinced investors, who perhaps hoped for a break with the statism proposed by their predecessor and party comrade Andres Manuel Lopez Obrador. “It will be a government of republican austerity,” Sheinbaum said when commenting on the outcome of the polls and analysts immediately expressed a certain skepticism, betting on a phase of uncertainty in the financial markets, precisely because of the fear that the new president, in the name of continuity with her predecessor, could carry forward the project to reform the Constitution in an autocratic key.
Not surprisingly, in the aftermath of the elections the Mexico City Stock Exchange had collapsed losing 6% in a single session and reaching the minimum of 2024 below 52.000 points. Then there was a rebound, but in June the S&P/BMV CPI index it turned out anyway down more than 5%. The losses since the beginning of the year instead exceed 9%, despite having started 2024 very well, with a record of almost 59.000 points at the beginning of February, the highest ever.
In Argentina, markets are still on their honeymoon with Milei
The first financial semester effectively coincides with the first semester of presidency of Javier Milei (in the picture, ed), took office just before last Christmas. And it can be said that, albeit largely thanks to speculation and the huge devaluation of the peso, the honeymoon between the stock exchange and the president of the "chainsaw" is still ongoing: since the beginning of the year, the Merval index of Buenos Aires indeed earned 42% and is still in the buy phase, thanks in particular to the highly anticipated approval in the Senate of the maxi reform strongly desired by Milei, the so-called omnibus law who, despite some vicissitudes, had already obtained the "yes" of the Chamber of Deputies. It is not surprising that such a radically liberal decree meet the favor of the markets, between privatizations of state enterprises and draconian cuts in public spending, through the abolition of social subsidies (electricity and gas bills, public transport) and even the suppression of some ministries.
But there is not only this: Argentina, which has a monstrous debt to the International Monetary Fund, not only obtained further financing from the latter, but a few days ago also reached an agreement with China to unlock the $5,5 billion credit default swap granted by Beijing to cover the debts of its South American partner. However, the news on the Argentine GDP is less good, which in the first half of this year lost 5,1% on an annual basis and the OECD forecasts for the whole of 2024 are not much better: -3,3%.
Brazil does not live up to expectations
Finally the Brazil, the first economy in the Latin American area, which however it's not running as Lula hoped, who returned as president for the third time at the beginning of 2023. In the first half of this year theThe Bovespa index in Sao Paulo has already lost 6%, but above all the exchange rate with the dollar is newsworthy, which in recent days has reached the highest value since the beginning of 2022 at 5,68 reais, not even far from the all-time record of 5,90 dated March 2020, in the first days of the pandemic .
Since the beginning of the year, the US currency has strengthened by 16,5% - this is inevitably favoring commodity exporting companies – in fact, even if the stock market has a negative half-yearly balance, it has been recovering for a few weeks – but it worries President Lula quite a bit. Which, however, according to analysts, bears part of the blame, considering that continues to send barbs at the Central Bank, insisting on need to lower interest rates, which today in Brazil are at 10,5% per year. Also contributing to the devaluation of the Brazilian real (which celebrated its 1th anniversary on 30 July) was the president of the Federal Reserve Jerome Powell, that on Tuesday 2 July he spoke of "significant progress for inflation" and a labor market that is slowing, putting a new rate cut at bay. For 2024, Brazil expects GDP to grow at 2,3%, slowing down compared to the 3% achieved in 2023.
