Argentina rises in markets

Argentina does not pass through the time of its economy. The activity barely grew 0.5 % in the first quarter of 2014, according to consultant Ferreres, and inflation rose to 33.4 % through March, following the devaluation of the peso in January. Last Thursday a general strike paralyzed the country. But not all look bad in the southern states: financial investors bet on its bonds and stocks.

Since the legislative elections in August 2013 was discarded the possibility of amending the constitution to allow Cristina Fernandez de Kirchner to seek another presidential election in 2015, shares and government bonds of Argentina have begun to rise and premium risk down.

Markets have begun to be excited about the next head of state is more lenient with them than Fernandez. With the devaluation, indicators collapsed for fear that the economic and political situation desmadrara but Argentine authorities have taken a number of orthodox economic measures, combined with others that are not, and investors have concluded with the recovery prices of stocks and bonds.

Also relevant is the fact that global markets are inflated liquidity and seeking returns regardless of risk, as evidenced by the recent successful placement of debt of Greece, a country that has been rescued by the EU.

In the last 12 months, the Nasdaq stock index gained Buenos Aires 81%, surpassed only by the indicator on the square of Caracas. So far 2014 has improved 17%, so the only surpassed Cairo, with 18%. The risk premium, which a year ago was over 1,300 basis points, has now fallen below 800. He is no longer on par with Ukraine, as when the devaluation of January, but there is still room for improvement.

A trial in the U.S. of the minority group of creditors who rejected the restructuring of Argentina’s 2005 debt still keeps the country at risk of a default.

” Global markets are overflowing with money and can not find good yields, leading to underestimation of risks. The share prices and Argentine bonds were very neglected, “says Guillermo Nielsen, who in the early years of the Kirchner government was Finance Secretary. In this position, negotiated debt relief, and also acted as ambassador to Germany.

Capital flight slows Since 2007, when Fernandez replaced her husband Nestor Kirchner as president of Argentina, shares of companies in this country have become worth half of what they cost half as Brazil, Mexico, Colombia, Chile and Peru, as a study by the dean of the School of Business at the University Torcuato Di Tella, Juan José Cruces. Since 2013, however, the gap began to shorten, as a professor at the University of Buenos Aires.

“Since August changed the flight of capital for income because there is a view that in 2015 a more market friendly government becoming ” explains Claudio Porcel, president of Balanz Capital, one of the main operators in Argentina bonds. Porcel detailed predicts that the market for now that the next head of state would be the opposition Peronist Sergio Massa, winner of the 2013 legislative Buenos Aires; moderate Kirchner Daniel Scioli, governor of the province of Buenos Aires, or conservative Mauricio Macri, mayor of the capital.

But Cruces Porcel and agree that the markets have also adopted the orthodox measures that Fernandez has started to take this year to avoid an economic collapse. Among them is a limited devaluation, improvement in the quality of government statistics, fiscal and monetary adjustments, return to the domestic debt market after six years and the formal start of negotiations for the unpaid debt to rich countries Paris Club (including Spain). “Investors see that if you do not wait until the next administration can get cheaper assets,” says Nielsen. Cruces believes Argentina can become the next “pearl” of Latin American markets, but there are also those who prefer to keep waiting until the picture clears. They distrust the government deepens Fernandez orthodox spin and doubt to the current exchange rate stabilization although this attitude suppose tomorrow have to pay more in a country in crisis.

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Posted by Jamshed Sindhu on Apr 23 2014. Filed under Business, World. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.