Supporters of  the victorious presidential hopeful of the Cambiemos party, Mauricio Macri celebrate his win over leftist Daniel Scioli at Buenos Aires' landmark the 9 of July Obelisk on November 22, 2015. Leftist contender Daniel Scioli conceded defeat to pro-market leader Mauricio Macri in Argentina's presidential run-off Sunday. AFP PHOTO/EITAN ABRAMOVICH        (Photo credit should read EITAN ABRAMOVICH/AFP/Getty Images)
© AFP

Two months after Mauricio Macri took office as Argentina’s new president, equity investors are moving back into the country.

Twelve out of 20 equity fund managers polled in the latest FT Confidential Research survey said they planned to allocate more funds to Argentina during the first quarter of this year, doubling the number of funds in the survey investing in the country in the space of 12 months.

Half the funds surveyed are based in New York or London and the rest in continental Europe and Latin America.

They were especially encouraged by the speed with which Mr Macri delivered on a string of electoral campaign promises after his victory on December 10.

These include unifying the exchange rate, removing capital controls and reducing crippling taxes on exports of agricultural and industrial goods.

Xavier Hovasse, head of emerging equities at Carmignac, said his fund would not normally deploy so much capital immediately following an election. “But in the case of Argentina there’s a very nice looking alignment of stars,” he said.

The game changer, however, would be a solution to the long-running dispute between Argentina and a group of “holdout” US hedge funds over the country’s defaulted debt.

Chances of a speedy resolution increased this month when Argentina offered to pay the holdouts $6.5bn for claims of $9bn, opening the possibility that Argentina could soon return to international capital markets.

The FTCR survey asked fund managers to pick the best stocks to benefit from the changes under way. Among the most popular were online retailer MercadoLibre, steel pipe manufacturer Tenaris and agribusiness company Cresud, which also has a real estate subsidiary.

They also liked utility companies such as Pampa Energia. In January, Mr Macri raised electricity prices as part of wider plans to unravel a state subsidy scheme for middle and lower-income electricity and gas consumers.

Distributors were not fully compensated under the scheme, depressing investment. Since the price rises were announced, two national distributors have said they will invest at least $400m between them in upgrades to their networks in Buenos Aires this year.

Lucinda Elliott is a researcher covering Latin America at FT Confidential Research

Follow us on Twitter @em_sqrd

Copyright The Financial Times Limited 2024. All rights reserved.
Reuse this content (opens in new window) CommentsJump to comments section

Follow the topics in this article

Comments