Argentine equities rebound as IMF talks provoke cautious optimism

BUENOS AIRES/SAO PAULO: Argentine equities jumped almost 5 percent on Thursday amid tentative optimism about ongoing talks between the government and International Monetary Fund, though traders warned the gains were fragile.

Late on Wednesday, Argentina’s economy minister voiced “enormous confidence” about clinching a new deal with the IMF to secure early disbursements from a $50 billion standby loan agreement approved in June. On Thursday, IMF spokesman Gerry Rice said the two sides were making progress in the talks and hoped “to conclude as rapidly as possible.”

The sanguine tone helped push up the Merval 4.56 percent in midday trade, its second consecutive day firmly in the black, after a rocky start to the week. The peso climbed 1.9 percent.

But traders were quick to warn that any lasting improvement in the mood of the local market depended on a tangible short-term resolution to the IMF talks.

“Despite some rebounds, it would be premature to interpret it as a change in the current complex environment, given that investors are still awaiting the result of the IMF negotiations,” said Gustavo Ber, economist at Buenos Aires consultancy Estudio Ber.

Across the region, equities markets generally posted light to moderate gains.

In Brazil, traders took heart in a Thursday Supreme Court decision rejecting jailed leftist former President Luiz Inacio Lula da Silva’s latest appeal to be allowed to run for president. A key poll released late on Wednesday showed his likely stand-in, Fernando Haddad, with little support, and market-friendly candidates such as centrist Geraldo Alckmin gaining ground somewhat.

The Bovespa was up 0.011 percent in midday trade.

By far the biggest percent gainer on the index was highway operator Ecorodovias Infraestrutura e Logistica SA, which climbed 6.2 percent after analysts at Morgan Stanley raised their recommendation on the stock to ‘overweight’ from ‘underweight.’

Source: Brecorder