And when I say big dump, I mean big dumpAnd it's also infecting the Spanish exchange, as the IBEX is down 8%. This morning trading in Repsol (REP) (super-exposed to Argentina via YPF) was suspended when it dropped 10%.
The Argentina Merval dropped another 12% today as the rush for the door continues. Bonds have also dropped like a stone again (toldya it was only for the brave) though I have to say this now is definitely overdone; after all, you can agree or disagree with the AFJP nationalization move, but what it certainly does do is guarantee that Argentina has the money to service is debt over the next few years. Argentina vigent bonds are now trading very close to the pre-2002 defaulted bonds level....and that's plain weird (why? Cos the non defaulted bonds get 20+% interest rate tields paid on them).
To wrap up, FWIW here's part of a mail I sent to A.N. Other yesterday. One of the subjects in question in the mail exchange (with a smart dude, I'll add) was the Argentina AFJP move and how it might affect wider things, and here's wot your humble servant writ:
The Argentina Merval dropped another 12% today as the rush for the door continues. Bonds have also dropped like a stone again (toldya it was only for the brave) though I have to say this now is definitely overdone; after all, you can agree or disagree with the AFJP nationalization move, but what it certainly does do is guarantee that Argentina has the money to service is debt over the next few years. Argentina vigent bonds are now trading very close to the pre-2002 defaulted bonds level....and that's plain weird (why? Cos the non defaulted bonds get 20+% interest rate tields paid on them).To wrap up, FWIW here's part of a mail I sent to A.N. Other yesterday. One of the subjects in question in the mail exchange (with a smart dude, I'll add) was the Argentina AFJP move and how it might affect wider things, and here's wot your humble servant writ:
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The Argentine move will be given the shock'n'horror treatment by the North. Argentina doesn't care that much what the rest of the world thinks. This Kirchner move is straight out of the Peron playbook and will be accepted (with suspicions) by the locals. The bonds are selling off badly today (and therefore the merval) but the market is very much internally driven...there's not much foreign capital inside Argentina these days anyway. When the music stops the bonds will quietly revalue, as at least in the short term there's not much problem with debt servicing now. By taking over the AFJP they save 3.5Bn in interest payments and they retire plenty of paper debt at the same time. I think it's good for $8Bn in direct savings per year. The longer-term future is much less happy though, esp for Argentine pensioners who will be royally screwed by this move 15 years down the line.
What it does do is cast a very bad light on business/miners wishing to set up in Argentina: AQI, XRC, etc etc. FDI will be very, very leery about exposing itself to the Kirchner gov't from now on. Not so bad for the producing miners (MAI.to HOC etc).
I could help but notice how Roberto Lavagna has been semi-offered a post in Uruguay's Finmin this week. Very symbolic, and noteworthy how Uruguay has taken a different and altogether better economic path than Argentina this decade without turning its back on the social wellbeing of its citizens. Uruguay has been the quiet achiever down here and deserves a lot of credit.
What it does do is cast a very bad light on business/miners wishing to set up in Argentina: AQI, XRC, etc etc. FDI will be very, very leery about exposing itself to the Kirchner gov't from now on. Not so bad for the producing miners (MAI.to HOC etc).
I could help but notice how Roberto Lavagna has been semi-offered a post in Uruguay's Finmin this week. Very symbolic, and noteworthy how Uruguay has taken a different and altogether better economic path than Argentina this decade without turning its back on the social wellbeing of its citizens. Uruguay has been the quiet achiever down here and deserves a lot of credit.
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