8/8/2019 ARGY_Forbes_22Oct2008_Argentine Investors Cry for Themselves

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Market Scan

Argentine Investors Cry For ThemselvesMaurna Desmond, 10.22.08, 7:10 PM ET

Argentinas steps away from capitalism are causing major shakeups in emerging markets.

The country's surprise plan to nationalize its private pension system caused its stock exchange to slide for the second dayn a row Wednesday. The countrys shift toward socialism rattled investors and other emerging markets were pulled downwith it.

The Merval index, which measures the stocks traded on the Buenos Aires Stock Exchange, plunged 10.1% to 940.8,dding to 11.0% losses posted Tuesday.

Argentina's worrisome moves hit stock markets across the region, with Brazil's Ibovespa index down 5.0% to 37,103 andhe Mexican stock exchange fell 7.0% sharply as well. At one point, the Brazilian exchange had to close for a half hourecause the index was down 10.0%

American depositary receipts of Spain's Repsol YPF, which controls Argentine oil company YP, fell 18.9% in New York.The company said its executives had met with Planning Minister Julio De Vido of Argentina who assured them itsnvestment plans were safe. YPF itself slipped just 0.3% but that brought it down to $42.90 from more than $48 at the endf last month, when it began to decline.

Spain's Santander, the euro zone's biggest bank, which has a unit in Argentina, fell 9.9% on fears that Argentina mightventually nationalize banks.

The iShares S&P Latin America exchange-traded fund which measures the performance of stocks in the region, lost3.3%, or $3.53, to $23.04. The iShares MSCO Mexico ETF which tracks the price and yield performance of publiclyraded securities in the Mexican market tumbled 11.0%, or $3.42, to $27.71.

President Cristina Fernandez, an outspoken critic of speculating in financial markets as opposed to investing in realroduction, said Tuesday that she would send the proposal to nationalize the countrys $30.0 billion and 14-year-oldension system to Congress.

The Argentine administration has been taking steps away from capitalism for the past few years and this another move inhat direction to become less like Chile, Brazil or Mexico and more like Venezuela, said Claudio Brocado, a portfolio

manager at Boston-based asset manager Batterymarch. What were seeing is contagion. What is happening in onemerging market is having an impact on other. The administrations proposal is affecting companies around the world withxposure to Argentina, Brocado said.

The concern must be that local bank depositors withdraw money from Argentine banks either to spend on dollar-enominated goods, such as gold, or to try and convert it into dollars, fearing that inflation is about to soar," said Simon

Smollett, an analyst at Calyon Credit Agricole.