Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
Settings
Settings
Dynamic quotes 
OFFON

4-Traders Homepage  >  Equities  >  BOLSA DE COMERCIO DE BUENOS AIRES  >  YPF SA    YPFD   ARP9897X1319

YPF SA (YPFD)

SummaryNewsAnalysisCalendarCompanyFinancialsConsensusRevisions 
News SummaryMost relevantAll newsSector newsTweets 

Argentina Misses Out As Foreign Investors Balk At Policies

share with twitter share with LinkedIn share with facebook
share via e-mail
0
05/08/2012 | 08:17pm CET

--Argentina's economy receives modest FDI for its size

--Argentina has posted rapid growth even without much FDI

--Argentina could find it harder to attract more FDI as economy wobbles

 
   By Ken Parks 
   Of  
 

Argentina has defied skeptics by posting almost a decade of rapid growth without significant foreign investment. But the South American country may soon wish it had attracted more as President Cristina Kirchner's pro-growth policies show signs of fatigue.

Last year, Argentina again trailed several of its smaller neighbors in drawing foreign investment, according to the United Nations annual report on foreign direct investment in Latin America and the Caribbean.

As the region's third-largest economy, Argentina ranked sixth last year as a destination for FDI, with inflows of $7.24 billion. Sequentially, it lagged behind Brazil, Mexico, Chile, Colombia and Peru. Argentina has now ranked fifth or sixth in the FDI table since at least 2006.

Equally telling is what locals think of the investment opportunities at home. A measure of capital flight tracked by the central bank almost doubled, to $21.5 billion in 2011 from the year before. Last year was marked by general elections, in which Kirchner was reelected in a landslide.

Kirchner's policies include restrictions on prices, imports, and the ability of firms to send money abroad, and have clearly made investors pause.

But that hasn't stopped Argentina from posting enviable growth rates.

The economy expanded 8.9% in 2011, after growing an average of 7.6% a year between 2003 and 2010, according to the government. Though the government statistics agency denies it, analysts say those figures are probably overstated by several percentage points. In any event, few deny that Argentina has enjoyed one of its longest periods of growth in generations.

Argentine farm exports such as soybeans fetch high prices, while manufacturing has enjoyed a renaissance thanks to strong demand from Brazil and what until recently was a cheap currency.

But that's only part of the story. Loose monetary policy and heavy government spending on subsidies, social programs and public works have also goosed the economy.

Rapid growth has come at the expense of annual inflation that most private sector forecasters say is between 20% and 25%. Ominously, recent data suggest the economy will grow at a much slower pace this year, while 12-month inflation expectations are at 30%.

Morgan Stanley economist Daniel Volberg said Argentina might be hard pressed to attract more foreign investment now that cracks are starting to appear in the economy.

"What you need to see is a shift in business climate and economic policy to generate expectations that the economic model is sustainable in the long term and that foreign investment in Argentina is safe and profitable," he said.

Instead, Kirchner has expanded the state's already large role in the economy. After her reelection in October, Kirchner implemented capital controls and import barriers to protect the central bank's foreign currency reserves that she uses to pay creditors.

Earlier this month, Kirchner expropriated a 51% stake in Argentina's biggest oil company, YPF SA (YPF, YPFD.BA) from Spain's Repsol YPF SA (REP, REPPY.) That was Kirchner's biggest nationalization since seizing about $28 billion in private pension savings in 2008.

The government has also increased pressure on companies to substitute imported goods for locally made products or to get into the export business. That has given rise to bizarre trade deals like car companies agreeing to export chicken feed, wine, olive oil and rice in exchange for import permits.

Not even foreign investors that follow the government's script have been exempt.

Earlier this year, Italian tire maker Pirelli & C. SpA (>> Pirelli & C. SpA) agreed to export about $100 million in honey to offset its import bill even after it pledged to invest $300 million to build a new tire factory in Argentina.

Industry Minister Debora Giorgi summed up the government's import substitution policy in recent comments.

"We believe in 'carrot and stick' managed trade; that way we get multinational companies in all sectors to come and produce in Argentina," she said.

The Industry Ministry didn't respond to a phone call and email seeking comment.

Coloring the FDI debate are vast untapped natural resources that one day could turn Argentina into a major foreign investment destination.

Argentina shares the mineral-rich Andes mountains with mining nations Chile and Bolivia. It's also home to the world's third-largest reserves of shale gas, according to the U.S. Energy Information Agency.

Barclays Capital economist Sebastian Vargas doesn't think Argentina's already modest FDI inflows can go much lower. Mining and energy will probably attract some foreign investment given the opportunities in those sectors, he said.

"The relevance of these investments will depend on the administration's capacity to convince investors that the YPF nationalization is limited to this company in particular, and will not extend to other sectors or companies," Vargas said.

-By Ken Parks, Dow Jones Newswires; 54-11-4103-6740, ken.parks@dowjones.com

Stocks mentioned in the article : Pirelli & C. SpA
share with twitter share with LinkedIn share with facebook
share via e-mail
0
Latest news on YPF SA
01/10DJYPF : Oil and Gas Firms Pledge $5 Billion in Investments in Argentina This Year
2016DJGENERAL MOTORS : Aerolí neas Argentinas' New Chief Fights to Turn Around Company
2016DJCorrection to Tuesday's Maxus Energy Story
2016DJMaxus Energy Defends Environmental Settlement With Parent
2016DJYPF Can Finance Maxus' Bankruptcy Plan, Judge Says
2016DJYPF : Can Finance Maxus' Bankruptcy Plan, Judge Says
2016 YPF : YPFB & YPF Sign Agreement for Exploration & Exploitation of the Area Chara..
2016DJPan American Energy to Invest $1.4 Billon in Argentina
2016 YPF SA : ex-dividend day for annual dividend
2016DJMaxus Bankruptcy Deal Faces Opposition From OxyChem
More news
Sector news : Integrated Oil & Gas
12:10a How Russia sold its oil jewel — without saying who bought it
01/24 HOW RUSSIA SOLD ITS OIL JEWEL : without saying who bought it
01/24DJLibya Says Oil Sector Open Again for Business
01/24DJPETROLEO BRASILEIRO PETROBRAS : Brazil's Petrobras Increases Buyback of Overseas..
01/24DJLibya to Reopen Oil Sector to New Foreign Investments -- Oil Chief
More sector news : Integrated Oil & Gas
News from SeekingAlpha
01/13 YPF +24% for the week but Vaca Muerta still needs higher oil prices
01/10 Argentina clinches deal to draw billions in Vaca Muerta investment
01/10 ENERGY/MATERIALS - TOP 5 GAINERS / L : 00 pm
2016 YPF, Petronas to extend shale drilling pilot project
2016 YPF Sociedad Anonima's (YPF) CEO Daniel Gonzalez on Q3 2016 Results - Earning..
Advertisement
Financials ( ARS)
Sales 2016 215 144 M
EBIT 2016 21 759 M
Net income 2016 -
Debt 2016 129 757 M
Yield 2016 0,15%
P/E ratio 2016 -
P/E ratio 2017 96,65
EV / Sales 2016 1,24x
EV / Sales 2017 1,06x
Capitalization 136 068 M
More Financials
Income Statement Evolution
More Financials
Consensus
Sell
Buy
Mean consensus BUY
Number of Analysts 3
Average target price 440  ARS
Spread / Average Target 27%
Consensus details
EPS Revisions
More Estimates Revisions
Managers
NameTitle
Ricardo Darré Chief Executive Officer
Miguel Ángel Gutiérrez Méndez Chairman
Daniel Cristian González Casartelli Chief Financial Officer
Carlos Alberto Alfonsi Director & Executive Director-Downstream
Armando Isasmendi Independent Director
More about the company
Sector and Competitors
1st jan.Capitalization (M$)
YPF SA8 546
PETROCHINA COMPANY LIM..6.29%217 724
TOTAL-1.24%124 651
PETROLEO BRASILEIRO SA..7.60%70 725
NK ROSNEFT' PAO--.--%69 508
STATOIL ASA0.95%60 970
More Results