Boom year for Argentine stocks reflects fear more than confidence
By Walter Bianchi and Hugh Bronstein
BUENOS AIRES Oct 3 (Reuters) - Argentina has defaulted on its debt, the economy is stagnant, inflation is soaring and its market-friendly central bank chief has just been forced out. But its stock market is up over 100 percent this year, making it one of the world's top performers.
Investors are not buying up shares because they trust the country's economy or government policies but instead as a way of getting scarce dollars to hedge against the tumbling peso currency.
Even in dollar terms at the black market rate, the stock market's benchmark Merval index has gained 38 percent.
And the government is furious.
President Christina Fernandez this week publicly blasted the trading as unpatriotic, accusing those involved in it of trying to pull down her government and ordered an investigation into banks that use the stock market to get into dollars.
"This is pure speculation aimed at capturing exorbitant profits by supporting the dollar, because many of them have dollar positions overseas," Fernandez said in a televised address on Tuesday. "I'm asking that the regulatory agencies apply the norms needed to protect all Argentines."
She criticized the central bank for failing in its remit as regulator, even accusing it of helping commercial lenders and exporters to break currency laws.
The following day, central bank chief Juan Carlos Fabrega quit and was replaced with Alejandro Vanoli, a Fernandez loyalist expected to back her efforts to impose stronger state control over the economy. Continuación...