MAURICIO MACRI, mayor of Buenos Aires, is considered a plausible pro-business candidate for Argentina's presidential elections in 2015.

MAURICIO MACRI, mayor of Buenos Aires, is considered a plausible pro-business candidate for Argentina's presidential elections in 2015.

Argentina's Elections Promise Softening of Capital Controls

Issue 60, October 2013

Argentina is facing a political turnaround that promises to reverse capital controls, reviving investment in its gold-rich Deseado Massif. Polls suggest President Cristina de Kirchner’s ruling leftist faction the FPV is heading for a loss of seats next week in Congressional elections to the lower and upper house. The setback would undermine her dominance in Congress and quieten talk by her allies of a change to the Constitution that would allow her to run for a third term in 2015.

“She’s lost control in recent months,” says Christopher Ecclestone, head of research house Hallgarten & Co. “It was taken as a given that she’d be able to continue dominating the scene. Now it feels like a vacuum, that she’s going, sooner or later.”

Kirchner’s standing has been worsened by medical concerns. Last week she was diagnosed with a cranial blood clot caused by a bump to her head suffered the day after an election defeat in August. Doctors have ordered her to take four weeks rest and have advised her against reading the newspapers.

With Kirchner’s position under question, blocs within her Peronist party have begun to peddle for themselves and precedent suggests that acting president Amado Boudou is unlikely to survive in the post for long. When de la Rua resigned as president in 2001, the position escaped his technical successors, landing instead with the engineer of his downfall, Eduardo Duhalde.

A change in leadership in Argentina or a softening of Kirchner’s support promises the relaxation of a ban on buying US dollars that has riled the country’s pro-business elite. Bonds and stocks have risen in the country since Kirchner’s August defeat, with any softening of policy set to benefit companies in the country including Hochschild and Patagonia Gold, which has insulated itself from uncertainty via a partnership with the government of Santa Cruz.

“Patagonia Gold are in a good position,” Ecclestone says. “because they’re not really a foreign company.” Backed by the Bemberg family, who survived the expropriation of their brewery and bottling business by the dictatorship of Peron, the company is the largest landholder on the Deseado Massif. Shares have jumped 26 per cent since Kirchner’s setback in August, aided by heavy director buying. “They’re skilled at negotiating the pitfalls of Argentina.”

“Now it feels like a vacuum, that she’s going, sooner or later.”
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