By Bloomberg Business

Argentina could gain an investment grade in 2016 if the next president tackles policy changes from lifting capital controls to publishing reliable economic statistics, said Jorge Brito, president of Banco Macro SA.

The most important sign for investors will be the next president’s inauguration speech on Dec. 10, which should clearly lay out a credible economic plan to regain confidence and attract capital, Brito said in an interview at the headquarters of the bank in downtown Buenos Aires. Opposition candidate Mauricio Macri is currently favored to prevail over the ruling party’s Daniel Scioli in a runoff vote on Nov. 22.

“It’s irrelevant if they lift currency controls on day one or in 180 days,” Brito said. “The important part is... (Read More)

By The Wall Street Journal

In a dark year for many hedge funds, Argentina is emerging as an unexpected bright spot.

For more than a year, a handful of firms piled into Argentine investments, hoping elections to replace President Cristina Fernández de Kirchner would usher in an economic turnaround. Few investors expected a huge, immediate payoff: Just last year, the South American nation defaulted on its debt amid a legal clash with hedge funds, including Paul Singer’s $27 billion Elliott Management Corp.

But on the heels of the strong showing in the Oct. 25 first-round presidential election by Buenos Aires’s business-friendly mayor, Mauricio Macri, firms such as Bienville Capital Management LLC, Brevan Howard Asset Management, Redwood Capital Management LLC and Perry Capital LLC are counting their winnings.

The funds have been betting on shares, bonds and the Argentine peso, in addition to more esoteric investments. Russell Abrams, a former hedge-fund manager in New York, for example, has purchased what he says is the largest fleet of taxis in Buenos Aires as a way to invest in the country.

“The first round of the elections, including the opposition's victory in the province of Buenos Aires, was a clear repudiation” of President Kirchner’s policies that will make it easier for any winning candidate to embrace market-oriented reforms, says Cullen Thompson, Bienville’s founder. “Better policy should lead to a better economy.”

Bienville placed early wagers on Argentina and had its Argentine-focused fund, now up to $300 million, soar about 33% last month, according to an investor. Brevan Howard’s Argentina fund, now about $530 million, jumped about 22% in October, according to people familiar with the firm run by Alan Howard. The Bienville fund now is up about 30% for the year, while the Brevan Howard fund gained 14% through October, the people say.

 Jonathan Kolatch’s Redwood Capital was up about 10% in October in its Argentina fund and also posted gains in its flagship fund, where its Argentina trade makes up one of its largest positions, said a person familiar with the matter. Redwood holds some Argentine stocks but has more exposure to bonds and growth-linked securities known as GDP warrants.

The $12 billion Fir Tree Partners made about 20% on its Argentina position in October, thanks to GDP warrants and bonds, according to people familiar with the matter, contributing to gains for its flagship fund for the month.

Perry Capital LLC, whose Argentina position is one of the largest in its $9 billion flagship fund, also profited. Perry made about $60 million on the position, made up of exchange bonds and GDP warrants, in October, said a person familiar with the matter. Third Point LLC also benefited; Argentine government debt is the largest position in the firm’s credit portfolio, founder Daniel Loeb said in a conference call last week for his publicly traded reinsurance vehicle.

The gains come as emerging-market investments have rebounded sharply over the past month. Argentina’s Merval Index is up about 33% in peso terms since the end of September, while Argentine sovereign debt has climbed 8% in pesos, according to the Barclays Emerging Markets Argentina International Issue Index.

This year, several high-profile investments held by many hedge funds, such as Valeant Pharmaceuticals International Inc. and SunEdison Co., have run into problems, making the Argentine profits more valuable. Brevan Howard recently cut at least 10% of its workforce, illustrating funds’ difficulties. In a research note to clients dated Oct. 23, J.P. Morgan described this year as the worst for hedge funds since 2011.

The rallies began before the first round of Argentina’s election took place last month. Recent polls put Mr. Macri significantly ahead of rival Daniel Scioli, who has the endorsement of President Kirchner, in the Nov. 22 runoff election.

Hedge funds may face challenges extending their profits. A year or so ago, Argentine shares were very inexpensive, based on traditional valuation metrics, but they’re no longer as cheap. Just as important, it isn’t clear how much will change when a new president assumes power in December.

Argentina’s fiscal deficit will total 7.2% of GDP this year, according to a recent government estimate—the highest since 1982, when a military dictatorship was in power. The International Monetary Fund expects GDP to contract 0.7% next year, and economists say annual inflation is growing around 25%.

“The inheritance of bad policies, undermined basic institutions, widespread corrupt practices, mountains of past-due bills, frayed international relations, and a deeply divided electorate represent a veritable minefield for whoever takes over,” says Arturo C. Porzecanski, a professor of international economics at American University’s School of International Service. “Change will come no matter who wins, but it will occur in stages.”

Bienville is among those holding on to their Argentine holdings, saying a new president seems likely to engage in negotiations with the hedge funds that held bonds but didn’t consent to a restructuring after Argentina’s 2001 default.

The bulls say a settlement likely would give Argentina access to global capital markets again for the first time in more than a decade, leading to hopes for more gains as corporate profits rise and the nation gains a higher credit rating.

Mr. Thompson and other bulls say Argentina has been starved of capital under Mrs. Kirchner’s administration. Argentine assets accordingly represent a small slice of the portfolios of most global investors, something that will gradually change. One trader said he views Argentina as “one of the only growth stories in the world.”

Mrs. Kirchner has described the holdout hedge funds’ attempts to collect as akin to “extortion” and called some of the holdouts “vultures.” In contrast, Mr. Macri told the Financial Times soon after the election that while he wanted to be tough with hedge-fund creditors, he wanted to end the conflict.

“With Kirchner leaving office, there’s increased optimism about the country’s willingness to resolve outstanding liabilities,” says Gregg Hymowitz, managing partner of hedge-fund investor EnTrust Capital, which has money in several funds with exposure to Argentina.


By Los Andes

Farming Presidente, la división agrícola del grupo local Presidente, concluyó con éxito la primera campaña de venta al exterior de nueces provenientes de la “zona agrícola Altamira”, declarada así recientemente por el Concejo Deliberante de la comuna de San Carlos.

“La zona, por su amplitud térmica y horas de frío, es excelente para lograr excelencia y calidad tanto en vinos ultra premium como también para la producción de nueces”, dijeron desde la empresa, que ha sido la primera en lograr desarrollar el comercio exterior a escala para este tipo de cultivo de San Carlos.

Las operaciones se hicieron a países como Italia y Turquía. Pero no sólo a nivel internacional son valorados estos productos. En el mercado interno la firma también va por la buena senda.

Concretamente ha logrado, en base a la alta calidad y diferenciación de sus productos, ingresar a las principales plataformas comerciales y distribuidoras de Buenos Aires, lo cual le permitirá estar presente en... (Read More)

By Los Andes

La inflación de setiembre, basada en un promedio de mediciones de consultoras privadas, fue para diputados de la oposición de 1,92%, con lo que la tasa interanual es del 25,91%, revelaron ayer en la Cámara baja. Así, hay una leve desaceleración sobre el 2,17% que había arrojado en agosto y vuelve a los números de julio (1,92%).

Como es habitual, la difusión de la estimación alternativa se dio a conocer un día antes de que el Instituto Nacional de Estadística y Censos (Indec) difunda el Índice de Precios al Consumidor, previsto para hoy.

En una conferencia de prensa, Patricia Bullrich (Unión PRO- Cambiemos) defendió el índice de aumento del costo de la vida que mensualmente da a conocer la oposición e insistió en que la cifra que informa... (Read More)

By Buenos Aires Herald

Government tries to lower foreign currency demand from importers, savers, tourism sector.

With the bulk of the harvest season long gone, the government is set to face pressure on the already low foreign-currency reserves over the next upcoming weeks before the second round of the presidential elections as demand for dollars is growing from importers, savers and the tourism sector.

Central Bank reserves ended October at US$26.961 billion with a US$6.2 billion (18.9 percent) decline, the largest since January 2006 when the country cancelled its debt with the International Monetary Fund (IMF). Reserves are at their lowest level since April 2014 and have dropped 48 percent or US$25.6 billion since their last record of January 2011.

“The need of foreign currency has grown this year. It’s not a new problem but it has worsened. The future scenario isn’t good, no matter who wins. Problems will only grow as we get closer to the end of the year,” Ariel Setton, Plan Fenix economist, told the Herald. “The government still has tools to use but that would mean carrying out economic policy changes to lower the demand for foreign currency.”

While most of the reserves’ drop can be explained by the Boden 2015 maturity at the beginning of the month and other... (Read More)

By Los Andes

El incremento en la producción argentina de carne aviar en los primeros ocho meses del año generó una importante sobreoferta interna que deprimió sus precios  y disparó el consumo interno, señaló un informe de la consultora IES (Investigaciones Económicas Sectoriales). El análisis destaca que esa tendencia tuvo como contrapartida una baja en el volumen de exportaciones de productos avícolas.

La producción de carne aviar verificó una suba de 5,2% en los primeros ocho meses de 2015 al totalizar 1.324.000 toneladas y alcanzó un nuevo récord en 2015, resalta el estudio de IES.

Esa situación -explica- se vio impulsada por el mayor consumo interno, ya que las exportaciones cayeron casi... (Read More)

By Bloomberg

With the race for Argentina's next president heating up, one thing is clear: Whoever ends up winning will inherit an economy in tatters.

Analysts say the situation is so bad that changes to current President Cristina Fernandez de Kirchner's regime of currency restrictions, subsidized energy and trade protectionism are inevitable. The debate is now focused on how quickly and to what degree those adjustments should be applied.

"The challenge will be to launch an attack on all fronts on all these problems, because it won't be enough to tackle them one-by-one," said Luis Secco, director of Buenos Aires-based research company Perspectiv@s Economicas.

Here are the five biggest challenges that the struggling Latin American nation faces... (Read More)

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