Why risk, especially with enormous political instability when...

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unicrumba

5,236 Posts.

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01/05/19

11:25

Post #: 38349361
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Originally posted by micky78: ↑

What are you talking about?

Argentina's inflation is mainly due to currency (Peso devaluation), of course they are correlated with each other. Local people earn money in peso and are struggling to make ends meet. Argentina also import a lot of things from other countries and must pay in US dollars.

Say you want to buy a farm equipment (usually none is made in Argentina), now your peso worth 50% less than before, your cost of farm equipment will be twice more expensive. I was reading an article about many businesses cannot even afford to buy any equipment to run the business. Even if the farm equipment is made in Argentina, parts of that equipment is made overseas ie you can't sell locally made equipment cheap.

At moment he is an extremely unpopular president. IMHO he is likely to get voted out and replace by protectionist president. New president will make foreign companies much harder to do business.

Have read Argentina labor unions. The entire country is run by labor unions. To remove unions is like USA tries to remove guns.

Look at how companies with project in Argentina how they try to sell investors their "wonderful" story.... "New miracle man (aka the president) can fix up everything etc." The truth is Argentina is run by labor unions not the president.
IMHO I will stay away from Argentina brine eg GLN, LKE etc. because they are located in high sovereign risk and politically unstable country. When come to select which stock to invest, I look at sovereign risk and stability of the country as my first two selection criteria.

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Why risk, especially with enormous political instability when there is this:
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