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Money Management Executive

Funds Take Advantage of Low Peso in Argentina

August 12, 2003, 1:00 a.m. EDT 1 Min Read

U.S. fund managers, including Pegasus Funds and Southern Cross, are taking advantage of bargains in Argentina, Reuters reports. With the peso deeply devalued, fund managers are now not just buying stock in but actually buying up large portions or controlling interest in companies in leading industries, food and telecommunications companies. Last year alone, Argentina’s economy contracted 10.9%, putting strains on consumer spending and corporate earnings. The nation’s peso has fallen 70% in value since January 2002, when Argentina defaulted on its debt. The nation still owes $76.7 billion. However, in the first five months of this year, Argentina’s economy grew 6.1%.

"You are getting companies for half the price that you would for firms of similar quality and technology in the rest of the world," economist Miguel Bein said of Latin America’s third-largest economy.

Mario Quintana, a director with Pegasus, said his firm’s fund managers are looking past Argentine companies’ capital structure to those with "clear leadership in [their] sector." Many fund managers expect that aid from the International Monetary Fund will set the nation straight.

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The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.
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