The Real Fallout From Argentina's Nationalization Of YPF Sociedad Anonima [View article]
Psaal thankyou for the comments. I believe that the root of the problem goes back well beyond the introduction of price caps on domestic oil prices. The reality is that the Argentina economy has been mis-managed for decades. The economy is in serious need of structural reform but austerity measures combined with neo-liberal economic policies including liberalized trade and investment didn't work. I am very interested to see where this leads as I believe that President de Kirchner is too pragmatic to be solely pursuing nationalization for the sake of ideology.
Rupert I believe that you have misread my initial comments to your article. I am certainly not saying that Brazil has regressed. I am only expressing a view contrary to the points that you have raised in your article stating that it is a low risk country with a non-protectionist economic platform, a liberalized approach to international trade and is low risk for investors. I have clearly stated that I disagree on those points and that there have been significant economic,social and political changes since 2002 as well as providing the sources for your verification. I have also expressed a view that the economic and political climate in Brazil is significantly different from the view that you have put forward. I would also respectfully point out that all of the data on which I have relied including the Transparency International Corruption Perception Index is the latest data available and is from between 2011 and April 2012 and if you read the link that I have provided you, that can be corroborated.
With all due respect, my views are not skewed just because they differ from yours, they are based upon extensive and rigorous research of Brazil's current social, political and economic situation and not from a dated secondary source. I would also point out that Brazil has seen extensive, political, social and economic change since 2002, which has flowed into all aspects of Brazilian society, which in combination with many of the momentus global economic events that have occurred since then make the book rather dated. While the views and opinion expressed are mine the information on which I rely can be verified by reviewing the data available through the World bank, the IMF and the Brazilian central bank. You can also confirm it by viewing Transparency International's website and latest survey results. The legal changes are tracked through Worldlii and the trade regulations through the WTO and World Trade Alert. The links for that information along with a neatly summarized view of the current political economy with a country risk assessment can be found in my article: http://seekingalpha.co....
Hi Rupert I tend to disagree with your views on Brazil having a liberalized economy with low degrees of protection and being low risk for investors. It has the second highest number of protectionist measures in Latin America after Argentina and over the last 2 years has introduced significant changes in legislation to prevent or curtail foreign investment in farmland and natural resources. You will also find that the government is reinstating the policy of import substitution industrialization to exclude imports and promote domestic production and consumption.The government has also applied significant pressure to its Latin American trade partners, particularly Mexico, to limit imports and where they haven't it has instituted a regime of trade tariffs to protect local industries. Furthermore, the government has shown itself to be extremely willing to intervene in the economy as and when it feels it must to curtail foreign investment or goods. All of this presents a very different picture and this is before we start to examine the motivations behind the Chevron case. In addition, Brazil is rated as one of the less transparent (and possibly corrupt) countries in Latin America, if you review the Transparency International Corruption Survey for 2011. You will also find that Brazil is currently experiencing significant economic problems including a monumental economic slowdown with GDP growth of 2% to 3%, yet it is still battling high inflation and growing unemployment.
The Real Fallout From Argentina's Nationalization Of YPF Sociedad Anonima [View article]
Whether they are good or bad reasons there is a rationale behind the nationalization as I have explained in the article. Furthermore, given Argentina's history PEMEX should have done its homework and realized there was a risk of nationalization and worked that into its valuation of the investment just as Repsol would have certainly incorporated that risk into its valuation model. In addition, the further I dig into this the more I start to believe that there is more to the story than just Repsol being purely a victim and the Argentine government a crazed ogre as many commentators have stated or implied.
The Real Fallout From Argentina's Nationalization Of YPF Sociedad Anonima [View article]
Mike thank you for the comments, they are appreciated. The article was actually inspired by your valuation piece on YPF http://bit.ly/KRLbob and some of the more vitriolic and hyperbolic comments that it aroused. As well as the sensationalistic and almost hysterical pieces that I have read in the media since this started. I believe that many people have misread the Argentine situation and investment climate.
Thank you for pointing out the production constraints caused by the Petersen Group's need to fund repayments on the loan used to buy the holding using the dividend. I had considered this, but the more I delved into it, the more Byzantine the whole relationship between the Eskenazy family, the Argentine government and Repsol becomes. Making me even consider that Repsol were intentionally running the company down and milking it for the dividend, with no real intent to operate the company to its full potential. Which if that is the case further justifies the President's decision to nationalize the company.
I have no doubt that you will see investors lining up for access to the oil reserves in the Vaca Muerta, Chevron and Petrobras already have significant operations in Argentina and exploiting unconventional reserves is a key plank of Chevron's strategy. The Chinese are also taking a close look at the investment potential and Exxon has also invested a considerable sum in oil exploration in Argentina.
The Real Fallout From Argentina's Nationalization Of YPF Sociedad Anonima [View article]
yzzycz I haven't looked that closely at GTE so at this time I haven't formed a view on the company. Happy to conduct some research and put an article together for you on Seeking Alpha.
The Real Fallout From Argentina's Nationalization Of YPF Sociedad Anonima [View article]
yzzycz thank you for the feedback. If you have specific questions regarding any of my articles please let me know. I hope the PBR article your referring to wasn't mine. But if it was please let me know as all feedback contributes to improving the articles to ensure they are informative and useful for readers.
The Real Fallout From Argentina's Nationalization Of YPF Sociedad Anonima [View article]
High Sierra thank you for the comment. Can you clarify your point as it is unclear and I am not sure that I fully understand the issue that you are raising. Furthermore, as I understand it and based on all the information I have been able to find to date on ownership structure of YPF, PEMEX does not own shares in YPF either now or at the time of nationalization. As far as I can ascertain the shareholding you are referring to is the shares PEMEX holds in YPF's former majority owner Repsol, which is a separate entity from YPF.
Banco Santander: Tantalizing Value Or High-Risk Investing? [View article]
Jarco th ank you for the comments, are you able to clarify what you mean by paper profits and streaming of cash? All profits derived from STD's SA operations are actual profits that are directly contributed to the parent except in the case of its 2 fully independent subs, Banco Santander Brasil and Banco Santander Chile. In the case of both of these subsidiaries STD does not have the ability to stream cash back to STD as they are financially separate entities. In addition, the only SA assets they have sold down as mentioned in the article were Banco Santander Colombia, as they were not able to build the business to a critical mass due to the degree of competition in the Colombian market and Banco Santander Chile where they reduced their shareholding to 67% as they sold a portion of their shares to boost the regulatory capital of the parent. It is highly unlikely that they will have little to now non-Spanish business or engage in a firesale of non-Spanish assets as they have no requirement to at this time and the upcoming IPO of the Mexican business, where they will retain control, will allow them release capital in that business.
I agree, it will be interesting to see how it plays out, but at this time I believe that politically the situation can only get worse. There are deep seated social, economic and political problems in Greece that lead all the way back to the Greek civil war.
French Elections And The Fate Of Europe [View instapost]
Great article, Germany since unification has always been the dominant economic and political force in Europe and the other major European powers have always been grappling with the German question, hence why we had two world wars. Essentially, the EU has finally allowed Germany to realize its full potential for the economic and political dominance of continental Europe. I agree that austerity measures are the wrong approach but I am not sure what else it left in the policy bank given that the countries on the periphery of the EU were happy to gorge at the trough of German wealth while their ageing, structurally corrupt and inefficient economies rattled along fuelled by the good times.
Interestingly the Golden Dawn have won their first seats in Parliament ever? It almost seems as if history is repeating itself when the IMF measures and economic shock therapy failed in post-communist Russia there was a resurgence in the nationalist far right and the reactive populist left.
Banco Santander: Tantalizing Value Or High-Risk Investing? [View article]
Conservative thank you for the comments, while what you have said is generally correct, there are a number of other factors to consider with STD, especially when it is considered that it derives just over half of its profit from Latin America and owns 2 very successful listed subs in the region. This mitigates the risks associated with Spain. It is also probably the healthiest of the Spanish banks and while its exposure to sovereign debt does look daunting, it is unlikely that Spain will default. Overall it is suffering at the moment due to the pain in Spain and what I believe is a sentiment driven sell off of Spanish stocks.
Banco Santander - Preferreds Are Attractive [View article]
I also prefer the normal shares as well, but always interested in a different perspective and other investment options as it is all a learning experience.
The Real Fallout From Argentina's Nationalization Of YPF Sociedad Anonima [View article]
Brazil: A Land Of Opportunity [View article]
Brazil: A Land Of Opportunity [View article]
With all due respect, my views are not skewed just because they differ from yours, they are based upon extensive and rigorous research of Brazil's current social, political and economic situation and not from a dated secondary source. I would also point out that Brazil has seen extensive, political, social and economic change since 2002, which has flowed into all aspects of Brazilian society, which in combination with many of the momentus global economic events that have occurred since then make the book rather dated. While the views and opinion expressed are mine the information on which I rely can be verified by reviewing the data available through the World bank, the IMF and the Brazilian central bank. You can also confirm it by viewing Transparency International's website and latest survey results. The legal changes are tracked through Worldlii and the trade regulations through the WTO and World Trade Alert. The links for that information along with a neatly summarized view of the current political economy with a country risk assessment can be found in my article: http://seekingalpha.co....
regards,
CV
Brazil: A Land Of Opportunity [View article]
The Real Fallout From Argentina's Nationalization Of YPF Sociedad Anonima [View article]
The Real Fallout From Argentina's Nationalization Of YPF Sociedad Anonima [View article]
Thank you for pointing out the production constraints caused by the Petersen Group's need to fund repayments on the loan used to buy the holding using the dividend. I had considered this, but the more I delved into it, the more Byzantine the whole relationship between the Eskenazy family, the Argentine government and Repsol becomes. Making me even consider that Repsol were intentionally running the company down and milking it for the dividend, with no real intent to operate the company to its full potential. Which if that is the case further justifies the President's decision to nationalize the company.
I have no doubt that you will see investors lining up for access to the oil reserves in the Vaca Muerta, Chevron and Petrobras already have significant operations in Argentina and exploiting unconventional reserves is a key plank of Chevron's strategy. The Chinese are also taking a close look at the investment potential and Exxon has also invested a considerable sum in oil exploration in Argentina.
The Real Fallout From Argentina's Nationalization Of YPF Sociedad Anonima [View article]
The Real Fallout From Argentina's Nationalization Of YPF Sociedad Anonima [View article]
The Real Fallout From Argentina's Nationalization Of YPF Sociedad Anonima [View article]
Banco Santander: Tantalizing Value Or High-Risk Investing? [View article]
Greece - Giving The World The Finger [View instapost]
French Elections And The Fate Of Europe [View instapost]
Greece - Giving The World The Finger [View instapost]
Banco Santander: Tantalizing Value Or High-Risk Investing? [View article]
Banco Santander - Preferreds Are Attractive [View article]