Hi everyone!To put in context:i'm from Argentina and recently here is been going on the elections of the new president.On the first 'pre-elections'(these are called Las Paso and is more like a survey,the 'real' election is going to be on the 27 october)the Fernandez-Fernandez political party has won with a 47,36% and the party of Mauricio Macri(the current president) reached only 32,24%.So the monday that the results went public,the market got hit very rough and most stocks when down very hard(some almost -40% in one day).The reason why this happened is because the market doesnt like the party of FF,because if they get elected is almost 80% that Argentina is going to be in a very long and though crisis(sad to say this but in reality we are in a crisis since 1930/1940 years and we are declining as the years go by.But if the FF win,the crisis is expected to be very though to surpass.I have to mention that on the FF,the vicepresident is Cristina Fernandez De Kirchner=corruption).So my question is:knowing that most of the stocks dropped down a lot,and not for the companies fault but more because of a 'social' reason would you think it would be a good idea to buy and hold some of those stocks?I put SUPV(is a bank from Argentina) that list on the NYSE as an example.I have to clarify that i didnt do any fundamental analysis yet but after seeing some of the ratios in a quick way i found it very interesting to have a closer look to.The P/E of SUPV is 3,30 and the P/BV is 0,60,Then again,i didnt do any specific fundamental analysis,so i dont know how much are the earnings,how much debt they have,etc.So maybe there are better stocks to buy and hold and since almost every stock dropped a lot i have varios opportunities to look up to. And i see this period of time as an opportunity to buy stocks very below their intrinsic value,just like the 2008-2009.All of this taking of granted that despite FF winning the election,Argentina isnt going to transform on the next Venezuela.And since i mention Venezuela,would you invest in their stock market?Or make other types of investments?Or right now would you stay away from Venezuela? Thank you in advance! PD:sorry if my english isnt very good but im learning it.
Autonomy Capital, a $6bn hedge fund specialising in emerging markets, has emerged as one of the biggest losers from the rout of Argentina's financial markets after the setback to President Mauricio Macri’s re-election prospects — but the fund’s founder said the price plunge is a buying opportunity. The New York-based fund, led by founder and chief investment officer Robert Gibbins, declined 16.3 per cent in the first two weeks of August, according to a source familiar with the firm. The decline, triggered by a primary election result on August 11 which suggested Peronist candidate Alberto Fernández is favourite to win October’s presidential poll, more than wiped out Autonomy’s gains from earlier this year. Mr Gibbins told investors that the sell-off “presents an opportunity”. In a call with investors, he said that “Argentina is in the beginning of a normalisation process” and that “Alberto Fernández will not be a puppet” of Cristina Fernández de Kirchner, the populist former president who is Mr Fernández’s running mate. Autonomy was up 17 per cent in 2018, making it one of the top performing hedge funds while most other managers struggled with market volatility. Mr Gibbins said investors had overreacted to the primary election and said the starting point for Argentina now is different to where it was almost two decades ago, when it defaulted on almost $100bn worth of debt. Mr Fernández has been blamed for exacerbating Argentina’s financial pariah status, given her strained relations with international investors and penchant for interventionist economic policies during her presidency from 2007 to 2015. Markets have wrongfully priced default even on external debt Robert Gibbins, Autonomy Capital founder Mr Gibbins has long been bullish on Argentina’s prospects, despite concerns that its bond and stock markets were at risk of being overvalued. In a letter to investors last October, he said a $57bn IMF bailout and efforts by the Macri government to turn the country’s fortunes around laid the foundation for “Argentina to rise like a phoenix from the ashes”. The primary election result caused the peso to lose more than a fifth of its value against the US dollar. The country’s Merval stock index fell 48 per cent in dollar terms in a single day, the second-largest one-day drop in any of the 94 markets tracked by Bloomberg since 1950. Investors also deserted Argentina’s dollar-denominated debt. The once-vaunted century bond, which matures in 2117, traded as low as 45 cents on the dollar — a level investors say is in line with potential recovery values in the event of a default. Some of Autonomy’s peers and other investment managers were also wrongfooted by the change in sentiment. Funds run by Franklin Templeton’s famed bond fund manager Michael Hasenstab lost $1.8bn in a single day. According to a JPMorgan survey, investors reduced their positions in the South American country more than any other emerging market in August — although “overweight Argentina” still remains one of the most crowded trades. Recommended Fund management Hasenstab’s Argentina bust raises doubt over future of ‘bond kings’ With four-fifths of its debt denominated in foreign currencies, the peso’s slide has dramatically increased the country’s debt burden, which some estimates have nearing 100 per cent of GDP by year-end. Investors are currently pricing in an almost 90 per cent chance of a debt default within five years, according to the credit default swap market. Mr Gibbins said he did not agree. “Markets have wrongfully priced default even on external debt, which I think is not likely at all,” he said.
Very interesting read.After reading i came to the conclusion that basically there two differents paths Argentina can take.Either falls into a debt default in the next 5 years or starts to grow and finally pays the debt. What do you think it is going to happen?