BUENOS AIRES (Dow Jones)–Argentine stocks and bonds capped a week of steep gains with another surge Friday as the global markets rally sent investors on the hunt for riskier, higher yielding assets.
Argentina’s benchmark Merval stock index shot up 4.6% to close at 2,717.05 points Friday, bringing the gain for the week to 16.8%. Trade volume was relatively high at 72 million pesos ($17 million).
The Global X FTSE Argentina 20 ETF, which tracks shares of Argentine companies listed on international markets, rose 1.9% to $11.04 Friday in New York.
On Wall Street, investors were heartened by stronger U.S. retail sales data, signs of progress in Europe’s sovereign-debt crisis and stellar results from Google Thursday afternoon.
That stoked buying in Argentina, where shares had been beaten down by the global selloff stoked by fears over Europe’s credit turmoil.
Companies that took the biggest beating recently led the gains Friday.
Shares of power company Edenor (EDN, EDN.BA) soared 9.5% to close at ARS1.61. Aluminum maker Aluar Aluminio Argentino(AAARF, ALUA.BA) added 7.1% to close at ARS3.75.
Bonds also got a big boost as the high yields and recent losses drew in buyers.
The dollar-denominated 2038 Par bond added 7.7% to close at ARS51.50, cutting the yield to 9.68%.
The peso-denominated 2018 inflation-linked Bogar bond gained 3.45% in price terms to close at ARS198, with the yield at 14.54%
Earlier Thursday, the government reported an accelerated, but steady inflation rate in September, rising 0.8% on the month and bringing the year-on-year gain to 9.9%.
The official figure was in line with what economists expected the government to report, although many argue that prices are actually rising at twice the official rate.
Most economists say that annual inflation is running between 20% and 25% due to high government spending, lax monetary policy and a booming economy.
Those rising consumer prices have caused Argentina’s peso to appreciate in real terms as the inflation rate exceeds the central bank’s gradual depreciation of the currency.
The peso has lost just over 5.6% of its value against the U.S. dollar so far this year, closing at ARS4.216 to the dollar on Argentina’s MAE foreign-exchange wholesale market on Friday. That compares to the close at ARS4.2135 on Thursday.
online.wsj.com