November 13, 2012
More than 300,000 Argentines took to the streets of Buenos Aires recently to protest the administration of President Cristina Fernandez de Kirchner. It was the second major protest in two months against high levels of crime and inflation.
The protests have followed a string of blackouts which the current administration has blamed on hyperinflation and poor infrastructure left a previous government. If investors are a little puzzled by the government's scapegoating a prior administration, it is because the administration receiving the blame left office in 1989 and little has been done to improve the electrical grid since.
I have been bearish on the country since earlier in the beginning of the year and still think it is too risky for anyone but speculative investors. Any favorable policy reaction, or even an acknowledgement of economic reality by the government could lead to a bounce in share prices, but the longer-term outlook for the country is increasingly negative. The country is still largely locked out of the international debt market due to its 2001 default and inflation continues to exceed 20% per year.
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