Fausta's Blog

American and Latin American Politics, Society, and Culture

September 28, 2017 By Fausta

Argentina: Inflation down, markets up

Via Prof. Hanke,

Money flows when pro-business politicians are elected. Good moves from Argentina's Macri https://t.co/NV9TsOiklK

— Prof. Steve Hanke (@steve_hanke) September 28, 2017

Matthew Winkler writes, Investors Reward Argentina for Taming Inflation. Stocks? Up. Bond returns? Strong. The financial sector? Improving. Money managers have noticed.

Since he was elected president almost two years ago, former Buenos Aires Mayor Mauricio Macri is delivering on his promise to reverse the runaway cost of living and peril of default. He ended currency, price and trade controls and plans to eliminate the energy subsidies of his predecessor, Cristina Fernandez de Kirchner, that ballooned the deficit and ushered in the boom-and-mostly-bust cycle that 44 million citizens equate with modern times.

Yet

To be sure, the risk of Kirchner’s political comeback remains. Between June 24, when she announced her candidacy opposing the Macri government, and Aug. 13, when she faltered in the primaries, credit-default swaps, which measure the perception of creditworthiness, deteriorated 13 percent before improving when the votes were known. The yield on Argentina’s benchmark sovereign debt similarly climbed before returning to a level below its June 24 mark two days after the primary votes were disclosed, data compiled by Bloomberg show.

The Argentine stock market, by contrast, showed none of the bond market’s anxiety over Kirchner, and the Argentina Merval Index of 22 companies continues to reach new highs this year. The peso also has stabilized with the receding Kirchner threat, and after the primaries had its biggest one-day gain since April, Bloomberg data show.

Read the whole thing. Macri has his work cut out for him, but if he can “create a sustainable tax base that will inspire enough foreign direct investment”, in Winkler’s words, the country will be better poised for growth.

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Filed Under: Argentina, Fausta's blog Tagged With: Mauricio Macri

Comments

  1. Old Timer says

    September 28, 2017 at 5:23 pm

    Here is his Bio from Wikipedia.

    https://en.wikipedia.org/wiki/Mauricio_Macri

  2. Whitewall says

    September 29, 2017 at 8:25 am

    Too bad Venezuela can’t copy Argentina.

  3. Old Timer says

    September 29, 2017 at 10:54 am

    President Madura only has a high school education. He was a bus driver. He was hand picked by Chavez and Fidel. He gave aid to Cuba for the hurricane damage and aid to Mexico for the earthquake. All the while there is a mass exodus of Venezuelans going to Colombia because there just isn’t any food or medicine. .

    As a side note, Russia gave aid to Mexico. China, Iran and Russia are making inroads in the Latin World and all the while the USA is asleep.

    Let us hope they do not move into Barbuda and Dominica who appear need a Marshall Plan too.

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