Argentina hitting a multi year low today:
biz.yahoo.com
Tuesday October 2, 11:02 am Eastern Time
Argentine markets fall on tax data, deficit worries
By Brian Winter
BUENOS AIRES, Argentina, Oct 2 (Reuters) - Argentine markets fell on Tuesday after a larger-than-expected 14 percent
drop in September tax collection fanned worries the government would be unable to meet its pledge to avoid a default by
ending deficit spending.
The leading MerVal (^MERV - news) index was down 1.2 percent,
losing 2.9 points to 238.34 points at 11:45 a.m. (1445 GMT). Seven
shares declined, none advanced, and three traded unchanged. Turnover
was well below average at $1.4 million.
Argentina's benchmark Global 2008 dollar bond was down 1.93 percent
to 57.125 points.
Traders said they were concerned by data released late on Monday
showing that Argentine tax collection fell 14 percent in September
compared with the same month a year ago.
The steep drop in revenues, which Economy Minister Domingo Cavallo
attributed in part to a liquidity crunch amid the country's deep three-year
economic slump, means the government must make further unpopular spending cuts in order to meet its ``zero deficit'' pledge to
balance its budget.
The ``zero deficit'' plan, under which the government cuts spending every month to match tax revenues, is widely seen as the
only way for Argentina to regain the trust of investors worried for months that Latin America's third-largest economy might
default on its $132 billion public debt.
``The government has no choice to maintain the zero deficit policy, but the tax revenue decline is going to make it tougher,'' said
Juan Plett, a trader for Mackintosh brokerage.
Traders said the shadow of Oct. 14 legislative elections and worries about the global economy after last month's attacks on the
United States further complicated trading.
``The truth is that the world is very uncertain right now and few people are willing to buy stocks or bonds right now,'' Plett said.
Leading share Grupo Financiero Galicia , whose main unit Banco Galicia holds a significant amount of Argentine government
debt, lost just over a cent to $0.585.
Energy group Perez Companc lost one cent to $1.01. Its main unit, Pecom Energia , said on Tuesday it sold some oil field and
terminal assets for $125 million to Sipetrol, an affiliate of Chilean state oil firm ENAP.
Perez said in a statement the transaction would generate a pre-tax loss for Pecom of approximately $29 million.
``The Perez sale had no effect on its share price. Losses today have everything to do with tax collection and general
uncertainty,'' said a trader.
The MerVal is down 43 percent this year on investors' fears that Argentina could default on its debt.
Argentina's country risk rating, which measures the premium the government must pay to lure investors away from safe-haven
U.S. Treasuries, widened 47 basis points to 1,700 basis points.
U.S. markets traded sideways ahead of a meeting by the U.S. Federal Reserve Board, which is widely expected to cut interest
rates. The blue-chip Dow Jones (^DJI - news) industrial average gained 0.19 percent, while the Nasdaq (^IXIC - news)
Composite index gained 0.93 percent. |
