BUENOS AIRES (Dow Jones)–Argentine stocks and bond prices soared Thursday as investors across the globe celebrated an agreement reached by European leaders in their bid to resolve the euro zone’s debt crisis.
Argentina’s Merval Index of leading shares jumped 4.3% to 3,005.52 points amid very heavy volume of 400 million pesos ($95 million) as investors flooded into riskier markets like Argentina. That’s almost ten times the volume seen on a typical quiet day of trade in Buenos Aires.
Steel tube maker Tenaris (TS) surged 9.5% to close at ARS83.25, while Banco Macro (BMA) shot up 6.4% to settle at ARS11.70.
Money also poured into bonds due to the investor cheer and in anticipation of more buying over the short term as local insurance companies comply with a government order to bring their cash back home, Financial advisors Estudio Ber said in a market note.
Argentina’s government on Thursday gave insurance companies until the end of the year to repatriate all of their investments held offshore in the latest move by President Cristina Kirchner to stem pressure on the country’s international reserves.
According to the insurance regulator, SSN, insurers had investments of 55.3 billion pesos ($13.1 billion) at the end of June, of which about 15%, or ARS8.4 billion, was invested abroad.
Kirchner has stepped up measures to force companies to convert their foreign currency holdings into pesos, in order to increase the supply of U.S. dollars on the local foreign exchange market.
On Wednesday, Kirchner issued a presidential decree ordering oil, gas and mining companies to repatriate all of their export sales effective immediately. The decree is seen adding about $3 billion a year in dollars to the exchange market.
The Central Bank of Argentina has sacrificed a portion of its international reserves to keep the peso steady in the face of heavy capital outflows this year. Reserves closed at $47.7 billion on Wednesday, down from $50 billion at the end of August.
The peso closed unchanged from the previous session at ARS4.2355 on Argentina’s MAE foreign-exchange wholesale market Thursday, for a year-to-date loss of 6.1%.
The peso-denominated GDP warrant rose 1.3% to ARS16.05. The 2018 Bogar bonds jumped 3.5% in price terms to ARS217.50. The 2017 dollar-denominated Bonar X bonds gained 3.4% to close at ARS402.
-By Shane Romig, Dow Jones Newswires; 54-11-4103-6738; shane.romig@dowjones.com
Source: Buenos Aires Herald