Argentina stocks chalk up eighth straight gain
Updated 5:03 PM ET January 11, 2001
By Brian Winter
BUENOS AIRES, Argentina (Reuters) - Argentina stocks closed 1.43 percent higher Thursday, rising for the eighth straight session as optimism that the local economy would soon pull out of its 30-month funk continued to buoy shares.
"Investors believe that Argentina's economic recovery will begin soon. That's what all these gains are about," said Daniel Mackintosh, a trader for Mackintosh brokerage.
The benchmark MerVal index closed up 7.09 points at 501.54, its highest closing level since July 2000. Advances led declines 45 to 16 while 13 issues traded unchanged.
Turnover was a very heavy $42.7 million.
The MerVal is now up over 20 percent this year as investors bet that lower lending rates and fiscal certainty provided by a $39.7 billion financial security blanket from international lenders will stir Argentina's lifeless economy.
The index has yet to close lower in 2001.
Telecom Argentina closed 4.16 percent higher at $4.26 as investors snapped up the blue-chip share which they believe was left undervalued by the country's economic troubles.
Several traders also cited market rumors that Telecom Italia planned to purchase France Telecom's stake in Telecom Argentina, thereby gaining control of the Argentine company.
France Telecom and Telecom Italia are 50-50 partners in Nortel Inversora, a holding company which owns 54.7 percent of Telecom Argentina.
"I'd say the rise has more to do with the feeling that the stock is undervalued in the context of an improved local economy than these rumors you're hearing," Mackintosh said.
Rumors of a buyout have circulated throughout the bourse for months, but traders said Telecom Argentina has been especially susceptible to such talk lately because of its recent gains, including a 17.76 percent jump on Tuesday.
Energy group Perez Companc, the most heavily weighted share on the MerVal, gained one cent to $1.77.
Analysts said Argentina will benefit more than most other emerging market countries from last week's slash of U.S. interest rates because its currency is pegged at one-to-one with the U.S. dollar.
"History shows that Argentina, as a pure interest rate/liquidity play is the best performing regional market short term at a time of Fed easing," said Salomon Smith Barney in a research report.
A stronger euro against the dollar and more favorable export prices for key commodities are also cited by analysts as reasons to be optimistic about Argentina's economy, which has been mired in recession and stagnation for two and a half years.
On Wall Street, the blue-chip Dow Jones industrial average closed up 0.05 percent, while the tech-laden Nasdaq composite index shot up 4.61 percent.
