Commodities face contagion as global market meltdown deepens
For commodities linked to industrial cycles, such as copper, a hard-landing scenario would put fresh pressure on bulls.
As Argentina heads into its turbulent President election in October, a senior economic forecaster visiting Australia says the poll will fuel renewed interest in that country’s mining sector – but also raise the spectre of its uncertain post poll financial framework.
Addressing the first day in Sydney today of the Paydirt 2015 Latin America Downunder Conference, Buenos Aires-based Capital AgroIndustrial SA Managing Director and investment banker, Mr Diego Temperley, said if there were two observations that could be made pre-poll, it were that the current administration’s currency policies and its effects in mining were unsustainable and that the poll should act as a pivot for change and improved economic performance.
However, at the centre stage of these issues were Argentina’s foreign reserves and its foreign exchange regulations at a time the country was clearly in recession.
“If anything, the poll should precipitate the start of a more virtuous economic cycle,” Mr Temperley said, “and break the no jobs deadlock”.
“One of the challenges, however, will be the repatriation of some of the US$300 billion held abroad by Argentinians as this can create domestic growth opportunities including in mining.
“Importantly, all three Presidential candidates (Mrs. Macri, Scioli and Massa) have publicly expressed their interest in developing Argentina’s mining sector but have to deal with a high inflation rate of around 28% year on year and deliver changes in foreign exchange controls which can attract mining investment back into the country.”
Mr Temperley said that against all of these negative factors, Argentina offered Australian mining investors a number of strengths.
These included low debt levels, a healthy banking system and abundant natural resources and human capital.
“The expected change in macroeconomics post poll would quickly lead to an in improvement in key variables including capital inflows, GDP growth and investment and international reserves – factors appealing to international mining investors.”
MEDIA CONTACT: Kevin Skinner, Field Public Relations 0414 822 631
