Argentina is dealing with a complicated legal quagmire that they have been led to by the capital destructive policies of the Kirchner administration.
President Cristina Fernandez’s recent edict forcing Argentine banks to lend approximately $3.3 billion to businesses at below market rates by the end of the year has sent some bank shares significantly lower.
After last week’s incredible bank deposit decline of $645 million due to Argentina’s attempt to restrict foreign exchange purchases in South America’s second largest economy, the country’s central bank found itself in a position having to cut the dollar reserve requirements.
The recent landslide victory for President Cristina Fernandez de Kirchner has emboldened the Peronist to step up a series of decrees over the last few weeks, setting investors on edge.
Federal Reserve Chairman Ben Bernanke has committed the United States to a low interest rate environment through at least 2013, which makes emerging market banks such as Banco Marco SA (BMA, quote) and BBVA Banco Frances SA (BFR, quote) more appealing than American money center banks such as Bank of America Corp. (BAC, quote) or Citigroup Inc. (C, quote). Exchange traded funds such as FTSE Argentine 20 (ARGT, quote) and Wisdom Tree Emerging Market Small Cap Fund (DGS, quote) hold these stocks.
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.
Argentine banks surged today, with Banco Macro (BMA) and BBVA Banco Frances (BFR) in particular gaining massive ground during the session on a combination of news of former president Nestor Kirchner’s death and money flow coming from European banks to the U.S. this week.
While obviously tragic personally for the Kirchner and Fernandez families