The Latin American country has long been off the radar screen for investors, according to Luiz Ribeiro, head of emerging market equities, South America, at Deutsche Wealth and Asset Management (DeWAM). But summer 2015s election could be the trigger to buy that they have been waiting for.
It is most likely that this government will be able to stay in power and then we could see some changes in policies, he told Emerging Markets from Brazil.
BlackRocks senior portfolio manager for Latin America, Will Landers, agreed that Argentinas election next summer forms a bold case for investment.
It is a country that has a lot of good resources, good quality management teams but the economic policies dont make sense and change would take a while, he said. He also expressed concerns over those running for the presidency and what reforms they would bring to the table.
[Argentina] really has to come up with a credible candidate that a) would win and b) have reforms that make sense, he warned. Any plan that does make sense, however, will likely force the economy into recession before things got any better.
Earlier this year Argentina devalued its currency prompting the worst sell-off of the peso since the countrys 2001 sovereign default. President Cristina Fernandez de Kirchner had made the bold move in an attempt to curb inflation and regain access to the international debt markets.
Commenting on the policy initiatives taken by the government, the IMFs western hemisphere director Alejandro Werner, said: We have seen an important change in the policy mix recently. Its moving in the right direction, but there is still a lot of uncertainty.
Nicolas Cowley, manager of the Henderson Emerging Market Opportunities fund, expects another devaluation.
We are seeing the prospect of an even bigger devaluation based on the fact that other currencies have been weaker in the region and that will force Argentina to try to become more competitive by devaluing their currency.
HAIL THE SHALE
The IIF chief LatAm economist Ramon Arenca still thinks Argentina needs a significant fiscal adjustment, but warned that this is not happening with the current government.
Meanwhile, Argentinas shale gas reserves said to be the largest in the world is exciting both foreign investors and the countrys own government.
The energy sector clearly has huge potential, said Cowley. We have seen how positive shale gas has been for the US economy in the past couple of years. That could be Argentina in the next few years.
The Argentinian senate on Thursday reached a settlement agreement with the government and Madrid-based oil firm Repsol after a lengthy battle over the countrys seizure of YPF the now state-owned energy company.
Ribeiro said: YPF took over the Repsol operation in Argentina in 2012. The dispute has now been settled and the government is being very active in trying to find foreign partners to explore that shale gas reserve.