Last week the Merval, Argentina's benchmark stock index, finished slightly down amidst a growing clash between the Argentine government and YPF SA, the largest oil and gas company in Argentina. While the Global X FTSE Argentina 20 ETF (NYSEARCA:ARGT) was slightly up last week, the dispute has investors rattled.
The conflict centers on an Argentine government request that YPF SA reinvest its last two years' earnings in production and exploration rather than pay dividends to stockholders. The majority Spanish-owned company has been the target of mounting criticism by Argentine government officials, not least of whom President Cristina Kirchner, for failing to boost production.Argentina, once a net oil and natural gas exporter, has experienced a steep decline in oil production since 1999 with a precipitous 32% fall since 1998. This has necessitated growing petroleum imports which erased as much as $5 billion from Argentina's trade surplus last year.