Argentina’s non-seasonally adjusted industrial production rose 2% year on year in June, reversing the prior reading of -5.7%. The move marks a shift from contraction to growth on this measure, pointing to improved output conditions compared with the previous period.
The latest figure indicates a 7.7 percentage point swing from the earlier rate, based on the comparison between 2% and -5.7%. The series is reported on a year-on-year basis and is non-seasonally adjusted, so the reading reflects annual changes without seasonal smoothing.
Industrial Rebound Signals Asset Re-Rating
Argentina’s industrial output unexpectedly grew by 2% year-over-year in June, a massive jump from the previous -5.7% contraction. This sudden rebound suggests that the country’s painful economic reforms are finally paving the way for a real recovery. We believe this surprise turning point will trigger a sharp re-rating of Argentine assets in the coming weeks.
Market Strategies In Equities And Fixed Income
For equity derivative traders, we recommend going long on call options for major Argentine ADRs like Grupo Financiero Galicia (GGAL) and YPF. These stocks are highly sensitive to domestic economic activity and could easily see double-digit gains as international funds rush back in. Historically, similar positive industrial turnarounds in distressed emerging markets have led to sharp, short-term rallies in equity options.
In the fixed-income space, we should target options on Argentina’s USD sovereign bonds, particularly the 2030 and 2035 maturities. This growth print will likely compress Argentina’s country risk index, which has recently fluctuated around the 1,500-basis-point mark, and drive bond prices higher. Utilizing bull call spreads on these bonds allows us to capture this upside while limiting our risk to the premium paid.
