[A-List] More On IMF, G7 Nations Vs Argentina

[Rick Rozoff <r_rozoff@xxxxxxxxx>]

1) Stocks Slip In Mexico, Brazil, Argentina, Chile
2) London Financial Times Editorial Rants Against
Argentina, Applauds Britain, Italy, Japan For Turning
The Screws On Buenos Aires




1)
http://www.sfgate.com/cgi-bin/article.cgi?f=/news/archive/2004/02/04/financial1714EST6163.DTL

Associated Press
February 4, 2004

Stocks slip in Mexico, Brazil, Argentina, Chile

-Two issues that are weighing heavily on the market.
The first is Argentina's contentious negotiations with
its private creditors and its relationship with the
International Monetary Fund.


MEXICO CITY (AP) - Mexican stocks closed marginally
lower Wednesday, as gains in a few liquid issues were
offset by pressures coming from erratic U.S. markets.

The IPC index fell 28.67 points or 0.3 percent to
9674.18 points in a choppy session that failed to hold
on to gains after briefly puncturing the key 9700
resistance mark. Volume was a robust 220.8 million
shares worth 3.32 billion pesos.

Grupo Mexico B shares were up 0.7 percent to 36.18
pesos. The mining and railroad company said Tuesday it
will propose a share restructuring to consolidate its
mining assets in Mexico and Peru, transferring its 99
percent holdings in Mexican mining unit Minero Mexico
to Southern Peru Copper Corp. in exchange for
additional shares of the Peruvian company.

Market bellwether Telmex L shares closed down 1.4
percent to 19.08 pesos with 13.7 million shares
exchanged. Its wireless sister company America Movil's
L shares were up 0.8 percent to 18.03 pesos.
------------------------------------------------------
BRASILIA, Brazil (AP) -- Despite encouraging inflation
figures released earlier in the day, Brazil's stock
prices fell Wednesday after rumors circulated in
markets that Central Bank President Henrique Meirelles
had submitted his resignation.
The main Sao Paulo index ended 2.6 percent lower at
21,684 points, compared with 22,280 points at
Tuesday's close. Volume was heavy, with 1.2 billion
reals in shares changing hands.

The sell-off late Wednesday reversed a trend seen
earlier in the day, when investors entered the market
encouraged by weaker than expected inflation. The Fipe
research institute's CPI index ended January at 0.65
percent, lower than market projections.

The central bank, meanwhile, denied the rumors of
Meirelles resignation.

The rumors surfaced in overseas bond markets amid
speculation that Meirelles was dissatisfied with
comments by President Luiz Inacio Lula da Silva
suggesting that Central Bank autonomy was unnecessary.


The talk, however, prompted heavy selling by overseas
investors.

The steel and construction sectors were strongly hit,
with Usiminas declining 6.8 percent to 29.35 reals and
Inepar down 9.2 percent to 0.49 reals. Eletropaulo
utility company also fell steeply, dropping 9.1
percent to 68.60 reals.
------------------------------------------------------
BUENOS AIRES, Argentina (AP) -- Argentine stocks
resumed their downward path Wednesday, marking another
day of declines after an isolated rally in the
previous session.
The large-cap Merval Index slipped 22.74 points, or 2
percent, to 1,134.34. The broader General Index fell
827.23 points, or 1.6 percent, to 5,0297.88.

Two issues that are weighing heavily on the market.
The first is Argentina's contentious negotiations with
its private creditors and its relationship with the
International Monetary Fund. Last week, the Fund's
approval of the first review of the country's
financial program was marked by a high abstention rate
that injected extra uncertainty into the market,
exacerbating an already strong correction in stocks.

The second issue for investors is the government's
re-negotiation of public service contracts with
privatized utilities and when officials will end a
two-year freeze on utility rates.

Volume remained weaker than normal, coming in at 53.1
million pesos.

The only two large-caps to post gains Wednesday were
steel companies Siderar, up 1.3 percent to 15.40
pesos, and Tenaris, up 1 percent to 10.05 pesos.
Tenaris, which manufactures seamless steel pipes, said
this week that it has completed the US$9.6 million
acquisition of land and facilities from Canadian firm
Algoma Steel Inc., a purchase that will increase
Tenaris' presence in the North American country.

Fellow steelmaker Acindar wasn't able to rise along
with the rest of the sector. It fell 3.2 percent to
3.03 pesos.
------------------------------------------------------
SANTIAGO, Chile (AP) -- Chilean shares closed lower
Wednesday, largely on a sell-off in heavyweight
telecommunications company CTC.
Selling by some institutional investors reshuffling
their portfolios was behind the CTC sales. CTC's
A-shares lost 3.1 percent to 2,075.00 pesos. Rival
Entel rose 1.5 percent to 3,450 pesos.

Consumer-oriented shares gained on the positive
outlook for the sector, helped by record low interest
rates that have been spurring consumer lending.

Brewer CCU rose after reporting strong annual earnings
late Tuesday. It closed up 2.1 percent at 2,570 pesos,
helping its parent Quinenco to a 1.9 percent gain to
530 pesos.

Overall, Chile's blue-chip Ipsa index slipped 0.3
percent to 1,412.48. Volume dropped to 15.39 billion
pesos.
------------------------------------------------------CARACAS,
Venezuela (AP) -- Venezuelan shares closed higher
Wednesday in quiet trade, with the IBC General Stock
Index closing at 28,374 points, up 0.4 percent from
28,253 points Tuesday.
Shares of telephone giant CA Nacional Telefonos de
Venezuela fell 50 bolivars to 8,100.
------------------------------------------------------
2)
http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1073281471440

Financial Times
February 2, 2004

Time to say no to Argentina

A cheer apiece is due to the UK, Italy and Japan. Last
week, they broke ranks with the rest of the Group of
Seven nations, joined the brave band of existing
dissenters on the board of the International Monetary
Fund and said to Argentina: enough is enough.


The vote in the IMF's board, on the latest tranche of
lending to the fund's most troublesome borrower, went
through anyway. That was a pity. When the next
disbursement comes up for consideration, the fund's
management and the rest of its shareholder countries
must insist first on real progress with restructuring
Argentina's defaulted sovereign debt.

This is not to take the side of Argentina's foreign
bondholders, who made an ambitious opening bid that
the face value of their bonds should be cut by just 35
per cent. No-one buying bonds from a government that
operated a currency board but repeatedly failed to
balance its budget should complain when that bet goes
sour. Investors will take big losses, and they deserve
it.

The vital principle is that Argentina must negotiate
fairly and openly with all the players whose
co-operation is needed to turn the economy's dead-cat
bounce into a sustained recovery: international and
domestic bondholders, foreign-owned utility companies
whose prices have been frozen by government decree,
and the IMF itself.

Instead, the Argentines have chosen to cling to their
initial bid to foreign bondholders of a reduction of
more than 90 per cent in net present value, and to
deny the legitimacy of bondholders' groups attempting
to negotiate. They have also refused to allow utility
prices to rise. The habit of flinging personal insults
from Buenos Aires when such tactics meet inevitable
resistance does not give the impression of a
government negotiating, as IMF rules require, in good
faith.

The US must also stand up to Argentina. It has not
done so yet. For whatever motive - probably a mix of
strategic expediency and election-year politics - it
is sitting idly by while moral hazard is being
created. Any crisis-hit country of sufficient size and
importance could conclude from this episode that it
should choose foot-stamping defiance to the IMF over
painful but necessary reform.

Small wonder dissent is rising within the G7. Along
with applauding itself for stabilising currencies in
Iraq and Afghanistan, the US should put Argentina high
up the agenda of next weekend's G7 meeting in Florida.

Saying no to Argentina will not be easy. If the
Argentines respond by defaulting to the IMF itself,
the costs for other, blameless borrowers will go up.
The G7 must think of a way to offset this. Standing up
to a blackmailer means being prepared to call its
bluff, and the G7 needs a credible financing plan for
offsetting a potential Argentine default to the fund.

That will not be cheap. But it is better than bumbling
on in the forlorn hope that a recidivist government
will choose suddenly to go straight.





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