Friday, November 27, 2015

Experts: Argentina to receive US$10B in 2016

A man walks past Buenos Aires stock exchange building in downtown Buenos Aires.

Analysts say as much as US$25 billion could arrive in the country during 2017

Argentina will receive at least US$10 billion in foreign investment over the next year and some additional US$25 billion in 2017 from investors attracted by the neoliberal policies of Mauricio Macri.

The president-elect had said he would lift restrictions on both currency exchange and foreign trade.

Experts are hoping for a flood of direct investment and portfolios for the coming years. This capital could help kickstart the economy which, having grown for 10 years, is now stagnating amid a lack of foreign currency.

The new portfolio investments will be some “US$10 billion as a conservative estimate for 2016,” said Alejo Costa, economist a Puente, a local investment bank.

“This number could easily be as much as US$25 billion, in line with the influx of capital of our neighbours, by 2017,” he added.

Macri has vowed to unify the exchange rate gradually over the first months of his administration, thereby alleviating the current obstacles to sending dollars abroad freely. He has begun by designating a cabinet formed of economists and former executives drawn from the private sector.

In addition, the market is looking for a definitive settlement with the “vulture” funds, which hold unpaid bonds and are taking legal action in the US against Argentina, a return to global capital markets and an improvement in the often-criticized public statistics.

‘ATTRACTIVE COUNTRY’

Stocks have led the way for investors in the last 10 years in a country that had been one of the most sought after markets in Latin American in the 1990s.

The arrival of liquidity would be a breath of fresh air for companies after the restricted liquidity imposed on the country by the policies issued by the government of President Cristina Fernández de Kirchner.

With the first signal of the triumph of the conservative candidate, Argentina’s risk rating hit the lowest level in five years, the stock market reached record highs, the bonds remained stable and the exchange rate remains expectantly waiting for a devaluation.

“We have observed an appetite for investment in various sectors — energy, agriculture, infrastructure, financial services. there are good prospects but we are going to wait for the corresponding economic measures,” said Nicolás Bridger, economist for Prefinex, a financial consultancy.

Over the last week, when the polls showed that Macri was the favourite going into the runoff, trading on the Argentine stock exchange tripled in comparison to previous sessions, in a sign of investors appetites.

The stock exchange has improved up to almost 25 percent over the last four weeks before the runoff, and in the last three sessions shrunk by nine percent due to profit-taking.

“As the days go by and the president-elect plays more economic cards, interest in Argentina will grow,” said Ricardo Delgado, social director at consultancy firm Analytica.

Herald with Reuters