A Future or a Fall?
The Argentine government is taking a stab at reviving the country's feeble capital markets but it has tremendous, perhaps insurmountable, hurdles to overcome.
Argentina's capital markets have wilted away. Loss of
liquidity, delistings, internal bickering and years of
recession have almost killed off the Buenos Aires Stock
Exchange. The corporate bond market barely exists. There is no
futures or derivatives platform. Companies still borrow mainly
from banks, instead of accessing the capital markets. The drop
in market capitalization means international fund managers hold
hardly any Argentine stocks, because they have such a low
weighting in the MSCI and IFC indices. Trading volume on the
Buenos Aires stock market has fallen 23% this year and on some
days, turnover is as low as $8 million. The Merval index has
fallen by half in the same period.
This is not what Domingo Cavallo intended in the early 1990s
when he privatized state-owned companies by selling them
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