Argentina Investment, IMF and Venezuela-Partnering with a Mad Dictator?
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.
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Sanjay John G.