Argentina Investment, IMF and Venezuela-Partnering with a Mad Dictator?

Off late the Argentine politicians, notably Kirchner, the President, have been trying to get close to Chavez in Venezuela. They are trying to become less "IMF dependent", so to speak, because IMF poses some strict conditions when they loan money.

If you want to loan money, it is completely fine to attach conditions to it. In getting closer to Chavez, Argentina risks alienating the US, it's biggest market, who has pretty much an anti-Chavez policy in place now. I would much rather trust the IMF than a dictator like Chavez, who is basically ruining the economy of Venezuela! Venezuela is a most amazing place, great food, good friendly people...and having a bad leader makes me feel truly sorry for those guys...

My bet is that the economy of Argentina will be alright, and these deals will become insignificant as Argentina starts to get back up on its feet again and become to Jewel of South America, as it always was. It already is doing well on Foreign Reserves, last month they stood at a respectable $29B. Argentina is paying off the IMF debt of about $9B before the end of this month, prematurely, which is a good sign. With two neighbors firing on all cylinder (Chile and Brazil), Argentines will follow thru.

Just look at the stock charts of BFR and GGAL, and compare them to Banco de Chile (BCH), the biggest private bank in Chile, and Unibanco (UBB )and Banco Itau ( ITU) , the big banks in Brazil. BFR and GGAL together are about $2B in market cap. BCH alone is $4.5B, and ITU and UBB are comibed about $40B. Even Bancolombia (CIB) of Colombia is $5B---and those guys are hardly the most trustworthy folk for investors. The Argentine banks look so cheap in comparison to them...the market is STILL writing Argentina off as a meaningless country. .Suits me just fine... I like to buy blue chips when noone is interested...Argentina will come back, give them a couple of years to sort everything out, they're coming out of the worst crisis any country has ever seen...and when they get it together, money will be made here. That's why I love Bank stocks like BFR and GGAL.

If you compare populations, PPP, etc. of Argentina, Brazil and Chile, you will realize that unless something really goes awry in Argentina again, the Banks here will catch up to their neighbors, who are minting money.

Subscribe now to The Wall Street Journal and get up to 8 weeks FREE

The Prudent Speculator -- Ranked #1 by Hulbert for 10, 15 and 20 year performance...Click Here!

If you subscribe to the Wall Street Journal or the Prudent Speculator(a Forbes.com publication) using the links above, I get a commission.


Sanjay John G.

IRS-A Real Estate Play on Argentina

When Argentina collapsed in 2001, the real estate prices really plummeted, as I covered in my previous post. People who bought real estate in Argentina at that time made out like bandits-I personally know two people who quadrupled their money in 3 years. That is some gain for traditionally conservative real estate investing!

In 2005, I am still bullish on real estate in Argentina. One could go in and buy property in Argentina, but a better bet is to buy stock of IRS. Why?

As a foreigner, getting money into Argentina is hard. The banking system is laden with bureaucracy, and real estate transactions are made in cash. Yes, there are no bank-bank transfers for real estate. You go to a real estate agent with a briefcase full of dollar or peso bills, (they actually count those bills!), and you get your apartment or house papers from the seller sitting in front of you, declaring you the owner. An American friend just now paid US$150,000 cash for an apartment.

Call me conservative, but that makes me uncomfortable. I like intermediaries like banks, the paper trail...In case I run into problems and some owner is a thief and has sold the apartment twice. How would I know he didn't sell it to another hapless foreigner wanting to invest in real estate in Argentina? Since I live in Buenos Aires, I can tell you-sometimes it is hard to believe how inefficient things are in this country which until a few years ago was the Jewel of South America.

And I think to myself-if getting money inside a cash starved country is hard, imagine if I have to sell my apartment and take dollars out of Argentina? No Sir, I don't want to take a chance. I know I can double my money in a few years if I buy a nice apartment, but I am not sure I can ever cash in the chips.

So I buy IRS stock (IRS is the symbol on NYSE). Inversiones and Represntaciones S.A. is the biggest and most venerable real estate company in Argentina. See chart here. They own the big malls in Argentina. They own office buildings, some residential properties, and three luxury hotels as well. I am much more comfortable owning IRS stock, letting it appreciate 10-15% a year, than buying an apartment in Argentina. I personally think that the real estate sector in this "Paris of South America", as Buenos Aires is lovingly called, is a nice way to play the economy, which should keep growing in the coming years, and also an appreciation of the Argentine Peso, which is still recovering from its collapse 4 years ago.

Subscribe now to The Wall Street Journal and get up to 8 weeks FREE

The Prudent Speculator -- Ranked #1 by Hulbert for 10, 15 and 20 year performance...Click Here!

If you subscribe to the Wall Street Journal or the Prudent Speculator using the links above, I get a commission.

Sanjay John G.

Investing in Argentina Stocks

I spend considerable time in Buenos Aires, Argentina. Have been in the country off and on for a few years, seen the financial crisis of 2001 from just across the border (I was in Chile at that time) and how suddenly the most expensive city in the world (Buenos Aires) became one of the cheapest cities in the world. The Peso collapsed. Chileans rushed in to buy Apartments in Argentina. Chilean and Brazilian companies bought Argentine companies. US mutual funds wanted to have their own share (after their own brethren losing billions of dollars in defaulted Argentine Bonds) and bought shares in companies as well.

And here we are, in December 2005. The summer is setting in, it gets hotter by the day. And Argentina has nowhere to go but up from here.

You see, The Peso trades at 3 pesos to a dollar. While that in itself tells you nothing, take it from someone who lives here and has traveled a little in the world that things are not that expensive here, for the quality of life you can live. And Buenos Aires might be recovered, but the rest of Argentina has a lot of room to grow.

Fortunately for the American and global investor, you can play the Argentine market easily. Many big companies of this country have stocks listed as ADR's on the US exchanges.

Two big banks are Banco Galicia, GGAL, and Banco Frances, BFR. These two have the lion's share of Argentina's banking industry, together with Banco de la Nacion, the State run bank.

IRS is Inversiones and Representaciones S.A., the biggest real estate investment company (REIT) in Argentina. It owns a lot of properties, mostly commercial. Some of the biggest Malls in Argentina are owned by IRS.

LQU is Quilmes, the biggest beer company in Argentina, which is actually controlled by Brazil's Ambev now (of course most Argentines don't know this. They ones who do, don't like to accept it...).

YPF is the oil giant of Argentina, kinda like what Exxon Mobil is to US.

Sanjay John G.

Welcome to Argentina Stocks Investing Blog

Welcome to Argentina Stocks Investing Blog.