“Is Argentina the Next Turkey‽”- asks Dr.Bloomberg Man #27
This is part of a bigger DD I was working on, but I thought I would share it with you guys.
Let's set the record straight. President Macri is no Erdogan. Far from it. Macri is a diligent, free-market oriented, and business friendly President who has worked his ass off despite the hand served to him. (and he actually listens to his Central Bank, isn’t a de-facto dictator, doesn’t stage coups, and isn’t an all-around prick). Macri has a strong shot of winning reelection this October, despite his economic shortcomings.
While yes, Argentina is suffering from a 31% inflation rate, and yes, Argentinas fiscal situation isn’t too good, this isn’t 2014. Argentina is nowhere close to defaulting on its foreign debt obligations (don’t make me regret saying that Macri). The fact remains that Argentina is headed by a stable man who has followed economic policies recommended to him. These include raising rates to combat inflation, reforming the tax system in order to try and maintain a manageable fiscal situation, and remaining investor and business friendly throughout his tenure.
The whole reason for the economic freefall wasn’t even because of Macri’s policies. A drought in November of 2017 (remember you gotta switch the seasons around because we are in the Southern Hemisphere) severely affected the soybean crop this year, a main economic driver for Argentina. If there was anything I could compare Argentina too, it would be the House of Saud for Soybeans. That’s how integral that export is for the economy. When soybeans fail, Argentina’s export economy fails.
However, the government has many projects with the intent of diversifying Argentina's economy and has done so rather successfully. The main sectors of growth in the past five years have been Manufacturing, Real Estate, Commerce & Tourism, and Health Services, with Agriculture and Mining coming in at a close last. (sourced from the Ministry of Economy).
TL;DR: the Argentinian Economy is in a recession overblown by the media (remember, they are still getting positive GDP numbers, this isn’t 2009 or for that matter, 2014). Their stocks have reacted that way as well, with 50% declines on the BACA (Buenos Aires Stock Exchange). We believe that this is an opportune moment to buy into an economy whose shortcomings have been exaggerated, and its opportunities neglected.
The Real TL:DR: Sell everything that stonks gonna crash!
Submitted September 05, 2018 at 10:12PM by SpicyMussolini https://ift.tt/2M4Wosu
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