When to invest in Argentina
Alright guys, given the continued deterioration of the peso and hopefully Christina's reign, when should a corporation (that has identified a good opportunity in Argentina) look to enter the market? As the peso loses value, all the existing players who denominate their debt and equity in dollars or other global currencies are getting pasted. If you are financing your widgets in dollars and getting paid in pesos, it's going from bad to worse. That pain for existing players, should provide opportunity for new entrants, keeping in mind that as we go from 6:1 to 10:1 on the exchange rate, foreign goods are going to be way f*cking expensive. However, if you are a provider of durable, infrastructure-type of goods (and can live with a 4-7 year payback) , there may be some opportunity. Further, if you come in at 10:1 and buy / build a small assembly plant, you are now a local manufacturer and you've got a foot into the Mercosur, on the cheap.
When does Argentina hit the wall? This year? Next year? Will the people ever see the fallacy of governmental populism? Can it get worse than 10:1? Is there the possibility that there will be significant social unrest (not just the professional protestors)?
Thoughts?