LATIN AMERICAN MARKETS: Argentine Markets Drop As Pension Takeover Plan Takes Shape


October 21, 2008: 08:24 PM EST



Argentine markets reeled Tuesday as worries mounted that the government would launch a takeover of local, private pension funds.

A proposal by President Cristina Fernandez de Kirchner announced after the market closed, according to media reports, would nationalize about $30 billion in assets that had been overseen by 10 private funds.

Argentina's Merval stock index finished Tuesday with a loss of 10% to 1, 046.39, its worst closing level since September 2004. Its intraday losses reached 14%.

Shares of electricity provider Edenor (EDN) tumbled 27% and Telecom Argentina (TEO) dropped 23% to lead broad-based declines.

Banking stocks skidded, with shares of Banco Frances (BFR) down 21%, Banco Macro (BMA) off 15% and Grupo Financiero Galicia (GGAL) 13% lower.

Prices for the key discount bond tumbled to yield 21%. The peso managed to recover from a steep losses earlier in the day, slipping 0.1% to 3.211 per U.S. dollar.

"Stocks are getting hammered and bond-holdings are getting hammered because nobody knows exactly at what price will those bonds be withdrawn," said Ignacio Goni, head of research of Latin America at Riedel Research Group.

Administrators of privately run accounts in Argentina managed $29.3 billion at the end of September, with about 55% of the investments in government debt, Win Thin, senior currency strategist at Brown Brothers Harriman & Co. wrote in a note.

The sharp decline of commodity prices and the global financial crisis have hobbled Argentina's effort to meet budgetary needs as it faces $20 billion in debt obligations in 2009. Argentina's access to global debt markets was shut off when it defaulted on bonds in 2001.

"This is a major blow to the country's already isolated capital markets, with the negative implications of economic growth and investment this entails," said Daniel Kerner, an analyst who covers Latin America for risk-consultancy group Eurasia Group, in a research note.

Approval by Congress could come in the next few weeks, and labor unions have backed the plan, Kerner said. The private pension system was started 14 years to replace one that had been run by the government.

Goni said the nationalization proposal comes at a "bad moment in the profitability of the funds" amid the global financial crisis, and that he's not surprised by the Kirchner administration's move.

"Most of the people in my generation who are big contributors to this always thought that this money would be stolen," said Goni, speaking by cell phone from a rain-soaked street in Buenos Aires. "We never trusted that those funds would be ours. Call it defaults, call it devaluation, inflation, hyperinflation ... those funds are gone."

Amando Boudou, head of Argentina's national social security system, in a speech after a Kirchner signing ceremony said the change would "rescue Argentine retirees from uncertainty," according to a report from Dow Jones Newswires.

Elsewhere in Latin America, Brazil's Bovespa fell 1% to end at 39,043.39.

Mexico's IPC fell 2.8% to 20,203.27, and Chile's IPSA fell 0.2% to 2,541.65.


Izvor: cnn.com/money

Koja je tamo pljačka kad zemlja koja ima prirodne resurse stalno tavori na ivici kolapsa.

MMF zar je potrebno vise reci uzrocnik je prvog kolapsa a sad za ovaj drugi nisam siguran nisam nista cuo preko tv tako da ne znam koliko je ovo tacna informacija ili je samo vidjenje cnn-a.

Mada pretpostavljam da jeste.