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EMTA Forum in Buenos Aires - April 28

Thursday, April 28, 2016 

Sponsored by 

TPCG Group 2015 

Madero Walk
Pierina Dealessi 1855, Dique 1
Ciudad Autónoma de Buenos Aires

4:00 p.m. Registration 

4:30 p.m. Panel Discussion 

"Argentina: A Turn-Around Story?"
Argentina's new government is working to put the Holdout Years behind it, and with it, be poised to re-enter the global financial community. What will it take for Argentina to fully turn around the effects of the last 15 years? What effect will the new economic decisions of the government have for new and current investors? How will the government respond to the current challenges and what is the strategy for the short-to-medium term?

Fernando Alvarez de la Viesca (TPCG Group) - Moderator
Daniel Canel (AdCap)
Eduardo Levy-Yeyati (Director, Elypsis Partners)
Ricardo Maxit (Director, Galileo Argentina)
Javier Gonzalez Fraga (Independent Economist)
Daniel Marx (Quantum Finanzas)

6:00 p.m. Cocktail Reception 

Additional Support Provided by AdCap and Thomson Reuters. 

Complimentary for EMTA Members / US$695 for Non-Members/ Closed to the Press. 

Registration for this event is closed. We look forward to seeing you at a future EMTA event.

EMTA Forum in Buenos Aires Considers the New Argentina

EMTA’s first Buenos Aires Forum since the settlement of the holdout litigation took place on Thursday, April 28, 2016, with over 200 market participants in attendance. TPCG hosted the event, with the additional support of AdCap Securities and Thomson Reuters. The event was moderated by TPCG’s Fernando Alvarez de la Viesca, who asked each panelist to focus on a specific theme regarding Argentina’s economic direction.

Eduardo Levy-Yayati (Elypsis Partners and former Central Bank Chief Economist) led off, describing the “quadri-lemma” facing the country—the four juxtaposed issues the new administration must tackle, i.e., reducing the high inflation rate, FX policy, boosting economic growth and addressing the fiscal deficit. “Argentina is trying to balance a variety of goals,” he stated. The government would emphasize large infrastructure projects as a means of boosting the economy, he added.

Former Under Secretary of Finance Daniel Marx (Quantum Finanzas) followed up with a review of Argentina’s “entering a new phase of managing ourselves as a ‘normal’ country.” The country’s challenges also include lowering stagflation and debt sustainability, which at approximately 40% of GDP is not entirely comfortable, in his view. For Marx, it was not a given that there was sufficient appetite for expected provincial debt issuance; “we will have to wait and see,” he stated.

Political risks were analyzed by former Central Bank President and former Vice Presidential candidate Javier Gonzalez Fraga. “The challenge is to change our history,” he emphasized, noting that, for the past six decades, the election of non-Peronist presidents has always been followed by a “retrenchment,” i.e., losses in both subsequent mid-term and presidential elections. President Macri’s speed in increasing tariffs and concluding a holdout settlement was an attempt to use them as springboards to a new economic policy, which he hopes will result in victories in the next elections. “I am very optimistic,” declared Fraga, who argued that the policy of promoting private investment and public works could gain popular support from traditional Peronist strongholds.

In order for Macri to succeed, the government would also need declining nominal interest rates, the hiring of “young, talented” people, and the passage of a tax amnesty law “that won’t be cheap or generous,” but which could encourage the return of capital currently stashed abroad back into the country. Risks foreseen by Gonzalez Fraga included a Peronist opposition ready to leap on any administration fumbles, the economic slowdown in trade partner Brazil, and potential Chinese military action in disputed island territory.

Global factors were reviewed by former EMTA Board Member Daniel Canel (AdCap Securities). European issues that could affect the world economy included the upcoming Brexit vote and the continued economic malaise in Greece. As for China, Canel didn’t view it as a major concern, given the government’s new focus promoting economic growth rather than supporting the currency. Oil remained worthy of monitoring, and Canel pointed out that the strong correlation between US equities and oil of recent months has decreased. A potential victory by Donald Trump in the US elections should be of concern for EM investors “because we don’t know what he thinks,” Canel stated. Finally, Canel noted heightened expectations of a US rate hike by the summer.

Ricardo Maxit (Galileo Argentina) concluded the panel with ideas on specific trade strategies. “The good news is that Argentina is a place to make money because of the financial assets it has to offer,” he affirmed. Maxit alluded to a recent survey which listed Argentina as attracting the greatest interest by EM investors. Maxit preferred Argentine equities (anticipating a return to the MSCI EM index from “frontier” status in June 2017), while still expecting spread compression in sovereign and corporate debt.