A Setback for the Reconquista
Argentina's collapse has meant huge losses for foreign investors, particularly the Spanish, who spent richly to acquire market share in the 1990s. Growing instability in Brazil and elsewhere is adding to the pain.
A few months ago, Argentina was the focus of national
attention in Spain when anguished Madrileños from taxi
drivers to investors debated whether their country's
reconquista of the old colonies in Latin America in the 1990s
had been a colossal folly. The angst on the streets has
subsided since then but investors continue to express their
discontent on the stock market as volatility in the region
continues unabated. Spain's companies and banks have put
recovery plans in motion but face more turbulence ahead.
Nevertheless they remain convinced Latin America offers their
shareholders good returns on equity in the long run. Spanish
companies are more exposed to political risk in Latin America
than those from other countries because their investments
typically are concentrated in closely regulated sectors like
privatized utilities and banks. But the Spanish are not
retreating from the region yet. Instead they are shifting into
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