Argentina is a great market for U.S. retail investors, with over a
dozen fairly liquid ADRs with direct or indirect exposure. You can
play this resurgent Latin powerhouse. The local Merval benchmark is
up 31% over the last six months compared to Brazil's Bovespa (
), which is down 2.5%. And from the floor of the credit crisis, we
are looking at a 277% two-year rebound -- versus a relatively
sedate 120% gain for Brazil. The upcoming election in October looms
large, and would be an added boost to a market that already is
moving well on its own accord with the assumption that Kristina
Kirschner will win. In the global picture, Argentina is a food
provider to the world. This country exports wheat and other grains,
which are only positioned to take advantage of the emerging food
boom. The population is young, with only 11% above 65 and a full
24% under 15. And it has the fourth-highest GDP growth rate in the
world behind only Singapore, China and Turkey. And on the
consumer side, auto sales up over 16% are a strong indicator of the
emerging consumer potential. On the down side, the country has
major problems with inflation, which is listed at 10% but probably
trending closer to 26%. This is a great sovereign credit story
after the 2002 default:
- At $51.2billion, Argentina international reserves never
have never been higher.
- The primary surplus is impressive at $12billion last year,
but this maybe under pressure into elections spending.
BANKS: They trade somewhat rich like Brazilian banks, but
with huge ROE Growth (which is required if inflation is so high).
- Non-performing loans are very low.
- Loan growth is projected to be over 30% for the next few
- Argentine Banks fund at negative rates (consumers in
Argentina receive very little for their deposits because they
prefer this to getting robbed).
- Local fixed income prices that are through the roof helps
- These bank stocks pay great dividends.
- BFR (
): Banco Frances
- GGAL (
): Grupo Financiero Galicia
- BM (
): Banco Macro
Your basket: BFR (
), GGAL (
), BM (
), TX (
) - Ternium is good exposure, TEO (
) Telecom Argentina - an attractive valuation that pays a nice
dividend, and the new Argentine ETF ARGT (