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Argentine Stocks Lose Foreigners Fastest in 8 Years (Update1)
By James Attwood and Fabio Alves.
June 16 (Bloomberg) -- Argentina's stock market is losing foreign investors at the fastest pace since 2000 on concern accelerating inflation and a three-month farmers strike will curb economic growth and corporate profits.
About 1,000 emerging-market funds sold $157 million in Argentine stocks through May, according to fund flow tracker EPFR Global in Cambridge, Massachusetts. That's more than the $118 million average daily trading on the Buenos Aires stock exchange and the biggest outflow since 2000, the year before the government's $95 billion debt default. Argentina's Merval index lost 4.7 percent over the past year, compared with a 27 percent rise for the Bovespa index in Brazil.
[url]http://www.bloomberg.com/apps/news?pid=20601086&sid=amHC6ab0Rr_s&refer=latin_america[/url]
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[QUOTE=Tessan]By Carlos Caminada and Matthew Craze.
June 13 (Bloomberg) -- Argentina, the world's fifth-biggest wheat exporter, may grow less of the grain than previously expected as dry weather prompts farmers to scale back planting.
Fields sown with wheat for the next crop will fall to 4.8 million hectares (11.8 million acres) less than a June 6 forecast of 5 million hectares, the Buenos Aires Cereals Exchange said today in a report. Planted acreage will drop from 5.5 million hectares for the previous season, the exchange said.
Dry weather in Santa Fe, Cordoba and other major wheat- producing provinces has left the soil with less moisture than needed for seeds to flourish, prompting growers to plant less, the exchange said.
[url]http://www.bloomberg.com/apps/news?pid=20601086&sid=a16f6jSsJAdI&refer=news[/url][/QUOTE]OK, I see your point. Thanks.
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Other sources say the reduction in wheat acreage is due more to substitution of soy production for wheat. Agriculture bores me, but that is what I am hearing.
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[QUOTE=Tessan]The central bank, by deciding to keep the peso low, had to keep selling peso, and buying dollars, so they built up 50 billion dollars in reserves. They where able to do this, because of the trade surplus, which is mainly because of food exports. If not for the trade surplus, the peso would not have wanted to get stronger, and the central bank would not have been able to buy up all those dollars for pesos.[/QUOTE]Sure, but farmers need such low-peso structure. Without a strong government intervention and an hegemony of the financial sector like in the 90s, the "market" would create such a strong-peso crisis that would force small and medium farmers to sell their land, and after that force a devaluation to restore competitiveness.
Everybody hates the government, but everybody wants its protection too.
Andres
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I find it really ironic to find here the only reasoned view of the government's strategy with the retenciones, as well as a good deal of historical context, available almost anywhere I've looked or listened in Buenos Aires. Lucky to have Andres who is not only thoughtful but patient at fending off the cynicism of extrañjeros, a cynicism which is in abundance in porteños as well. I see things much as Andres has explained and consider the criticisms of the Kircheners as carpetbaggers as unjustified given the financial growth of the country and their dedication to bringing to justice for the first time the guilty parties from the dictatorship.
Equally hard to find is substantial information on the effects of the retenciones on farmers. On the weekend after di Angeli was hauled off to Concepcion du Uruguay for being a loudmouth, antagonist road blocker and trouble maker and the farm groups declared yet another period of road blocks I received an unsolicited e-mail from a "Productor Agropecuario" fanning the flames of strangling the country over the elimination of the new sliding scale on soy and sunflower exports with another seige. I wrote back telling him I thought they were wrong to basically be bringing the country down with their actions and they should pursue their grievances at the next election. He replied with the following, which I'm sure is bullshit but it's hard to find what the real consequences are on soy and sunflower farmer's earnings. Care to comment Andres?
"Deberias conocer mas la realidad de nuestro campo antes de opinar de forma erronea.
Suma muy simple:
Impuesto a las ganancias: 35%
I. V. A.: 21% (lo perdemos)
Retenciones hasta el 11 de Marzo /2008: 35%
Retenciones Moviles: del 9 al 11%
Total: 35 + 21 + 35 + 9 = 100 o sea rentabilidad CERO"
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Argentine Lawmakers Seek Special Session on Farm Export Taxes.
By Bill Faries.
June 17 (Bloomberg) -- Argentine opposition lawmakers will ask Vice President Julio Cobos to call a special session on farm export taxes after anti-government protesters took to the streets across the country yesterday.
Senator Gerardo Morales of the opposition Radical Civic Union party said Cobos should use his constitutional authority as head of the Senate to facilitate debate on taxes that were introduced March 11.
The government is 'worsening a spiral of violence and inflation,'' Morales said during an interview on Radio 10. 'Congress was created to deal with these kinds of circumstances.''
[url]http://www.bloomberg.com/apps/news?pid=20601086&sid=asV6hr9jaCDg&refer=latin_america[/url]
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It is possible that CFK does not want congress involved, and my tell Vice President Julio Cobos not to call a session of congress.
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One of the sectors most hard hit by the farmer's revolt has been tourism. According to recent figures released by the Argentine Business Federation of Hotels and Restaurants the first three weeks of the blockades alone caused loses in the Argentine tourist industry of 73 million pesos (around $24 million) At the same time thousands of jobs in the tourist industry are now at risk and many hotels and restaurants in Argentina face the possibility of imminent closure unless the blockades are lifted.
Last weekend was a bank holiday in Argentina but, with over 300 roads blocked, an estimated 60% of coaches were marooned on highways and bus stations all over the country. Many coach companies simply stopped issuing tickets altogether. Long distance coach companies also reported a 40% drop in ticket sales in comparison with other weekends.
In response hundreds of tourist industry workers descended on Highway 14 in the province of Entre Rios to vent their frustration at the farmers for the damage they have caused to the tourist industry and the thousands of jobs they are now putting at risk.
[url]http://www.guardian.co.uk/travel/2008/jun/17/argentina.travelnews[/url]
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[QUOTE=Andres]Sure, but farmers need such low-peso structure. Without a strong government intervention and an hegemony of the financial sector like in the 90s, the "market" would create such a strong-peso crisis that would force small and medium farmers to sell their land, and after that force a devaluation to restore competitiveness.
Everybody hates the government, but everybody wants its protection too.
Andres[/QUOTE]The government is supposed to do what is good for Argentina. They decided to have a low-peso policy, to help all exports. Including the 40% of exports that come from the farmers. Although the governments policy does help the farmers, they would still sell their food, especially now, when food is in big demand. Argentina's other exports would not sell so well, since price is very important, and if the peso where to be much higher, they would be uncompetitive.
The government get more money from the farmers, then what the farmers make, since they are taxes before expenses. Don't think the government helps the farmers more, then the farmers help the government.
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[QUOTE=Bacchus9]"Deberias conocer mas la realidad de nuestro campo antes de opinar de forma erronea.
Suma muy simple:
Impuesto a las ganancias: 35%
I. V. A.: 21% (lo perdemos)
Retenciones hasta el 11 de Marzo /2008: 35%
Retenciones Moviles: del 9 al 11%
Total: 35 + 21 + 35 + 9 = 100 o sea rentabilidad CERO"[/QUOTE]Thanks, Bacchus.
If they had zero profit (rentabilidad cero) they wouldn't be able to remain in business or to spend any money at shopping malls or in renewing their SUV fleet. They would keep rusty Ford F100 trucks and save the extra money for hard times.
His numbers make no sense at all. It seems that all operational costs don't exist. Gas is free, also salaries and consumables. As of them, the only one who gets the money is the government. RMAO.
However, I understand their position. They need to play the role of outraged victims to justify their actions and reinforce their belief in their delusions.
As you can see, anyone who doesn't agree with them is tagged as not-to-date with their reality ("Deberías conocer mejor antes de opinar.")
Andres
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[QUOTE=Tessan]Argentine Lawmakers Seek Special Session on Farm Export Taxes.
By Bill Faries.
June 17 (Bloomberg) -- Argentine opposition lawmakers will ask Vice President Julio Cobos to call a special session on farm export taxes after anti-government protesters took to the streets across the country yesterday.
Senator Gerardo Morales of the opposition Radical Civic Union party said Cobos should use his constitutional authority as head of the Senate to facilitate debate on taxes that were introduced March 11.
The government is 'worsening a spiral of violence and inflation,'' Morales said during an interview on Radio 10. 'Congress was created to deal with these kinds of circumstances.''
[url]http://www.bloomberg.com/apps/news?pid=20601086&sid=asV6hr9jaCDg&refer=latin_america[/url]
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It is possible that CFK does not want congress involved, and my tell Vice President Julio Cobos not to call a session of congress.[/QUOTE]Opposition lawmakers tried twice before, but lawmakers supporting CFK were absent and the session had to be called off for lack of "quorum".
Even if they succeeded, the lawmakers supporting CFK would turn down the proposals. They outnumber the opposition.
In any case, holding a session under such circumstances doesn't set a good precedent. Tomorrow, any other industrial sector would force layoffs and road blockades to force the Congress to move forward their agenda.
Andres
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[QUOTE=Tessan]The government is supposed to do what is good for Argentina.[/QUOTE]When you set economic policies, you choose certain goals to accomplish as of your "political agenda" (or at least you are supposed to do so) When setting such priorities, unavoidably some sectors get favored while others not.
What I mean is that "What is good for Argentina" doesn't has the same meaning for a university researcher, an export-oriented farmer or a manufacturer who sells to the domestic market.
Andres
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I understand their position, even though I don't completely agree with it. The guy who did the math above is confusing a revenue tax (at current prices set at 46%) with a income tax (an extra 30%)
One thing I don't believe anyone can argue with is that a 46% tax on revenues is going to generate a strike in any country on earth and most of the inhabited universe.
The issue is with with farmers who are renting land to plant soybeans, most of them those large soya crop pools, who were paying an average of 1 tn of soybeans per hectare at last year's prices (320 USD per tn) Yields range between 2,5 and 3 tns per hectare, with an extra half tonne going towards fertilizer, fuel, machinery and seeds. If the government is taking 1,3 tns in a revenue tax, then their margins are reduced to a range betwen 5-7% from 15-20% last year.
Farmers who work their own land are affected but not nearly as much. What this does is kill the financial incentive to invest in soya crop pools, as the yields are reduced severely.
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Keep it up!
[QUOTE=MadDrJoe]I understand their position, even though I don't completely agree with it. The guy who did the math above is confusing a revenue tax (at current prices set at 46%) with a income tax (an extra 30%)
One thing I don't believe anyone can argue with is that a 46% tax on revenues is going to generate a strike in any country on earth and most of the inhabited universe.
The issue is with with farmers who are renting land to plant soybeans, most of them those large soya crop pools, who were paying an average of 1 tn of soybeans per hectare at last year's prices (320 USD per tn) Yields range between 2,5 and 3 tns per hectare, with an extra half tonne going towards fertilizer, fuel, machinery and seeds. If the government is taking 1,3 tns in a revenue tax, then their margins are reduced to a range betwen 5-7% from 15-20% last year.
Farmers who work their own land are affected but not nearly as much. What this does is kill the financial incentive to invest in soya crop pools, as the yields are reduced severely.[/QUOTE]Great post. And it keeps the polemic based on what the facts really are. Andres and a few others are looking at Argentina as if it is an exception to economic rules. If the purpose of business is to simply employ people as Andres has advanced, then the K's should decree that no modern equipment can be used at all in Argentina and go back to horses as the transport mode. It will employ plenty of people producing goods unprofitable to sell but heck, think of the employed people.
Argento
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[QUOTE=MadDrJoe]Farmers who work their own land are affected but not nearly as much. What this does is kill the financial incentive to invest in soya crop pools, as the yields are reduced severely.[/QUOTE]That's part of the idea.
