Why is Argentinas stock market doing so well since 2012?

Check Argentinian Peso vs. another currency. When currencies are quickly devalued the stock value denominated in that currency generally goes up. People also pile into stocks and speculative investments to hedge against inflation.

Gringo
 
Gringo said:
Check Argentinian Peso vs. another currency. When currencies are quickly devalued the stock value denominated in that currency generally goes up. People also pile into stocks and speculative investments to hedge against inflation.

Gringo
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Correctamundo!

Recalling from memory, a prime example of Turkey's markets from about 1982-2005. (Check the web for more precise, if desired.)

The Turkish market went up more than 2 MILLION PERCENT! 68%, average compounded rate. But after adjustment for currency devaluation... EVEN THOSE WHO WERE 100% INVESTED IN THEIR STOCK MARKET LOST 98% OF THEIR BUYING POWER.

As a general rule, "if the market sky-rockets, it's because the currency plunged."
 
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Gringo said:
Check Argentinian Peso vs. another currency. When currencies are quickly devalued the stock value denominated in that currency generally goes up. People also pile into stocks and speculative investments to hedge against inflation.

Gringo
More...

And that's the reason? I'm not disputing it because if I knew the answer I wouldn't be asking here. But a quick check of the commie market doesn't substantiate this: http://www.bloomberg.com/quote/INDEXCF:IND at least not yet.
 
I did a quick google search and symbol for Argentinian Peso was ARS. You can double check it. USD/ARS gave this chart. I am not sure what you're looking at. Your link is showing Russian index for stocks I believe. From Argentinian stocks to Russian stocks? You're trying to learn this based on some logic that will simply tell you in advance which direction the stocks will head based on inflationary expectations?

Oil revenue is big for Russia and Argentina. Drop in oil means most companies in the index reliant on that might get hammered as their revenues get hammered. Now government can't make ends meet so it starts inflating. Inflating devalues currency and pushes residual asset value (stocks) up.

Tell me this. Is the devaluation of currency faster than the drop in revenue due to oil price collapse? I don't know. Central Bank probably has a clue. Based on those two forces price could either go up or down. Some sectors might see a boost while others related to oil maybe barely make ends meet after inflation. Using pure fundamentals isn't how I trade but you do what you find to work for you.

At least keep the logic consistent when you ask questions. Jumping from one country to another and indexes that are made of diverse set of stocks muddles an already complex issue.

Wish you all the best.

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Gringo
 

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Did you not say "When currencies are quickly devalued the stock value denominated in that currency generally goes up. People also pile into stocks and speculative investments to hedge against inflation." ???

That's a general statement so I looked to see if the principal applied to Russian stocks given the current devaluation of the Ruble. Got it?

"...will simply tell you in advance which direction the stocks will head based on inflationary expectations.." What? That must be somebody else's question.
 
wheaties said:
Did you not say "When currencies are quickly devalued the stock value denominated in that currency generally goes up. People also pile into stocks and speculative investments to hedge against inflation." ???

That's a general statement so I looked to see if the principal applied to Russian stocks given the current devaluation of the Ruble. Got it?
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Yes, I understand your jump. My point was that you could have been be a bit more clear. The way you're thinking is fine. Speculation based on fundamentals isn't something I do. It is because timing is the key in speculation that gives one the edge.

If central banks are inflating the currency the decline may get slowed as opposed to a total drop. This relative strength of whether printing is more than the withdrawal due to negative outlook is something that isn't generally clear, at least to me.
wheaties said:
"...will simply tell you in advance which direction the stocks will head based on inflationary expectations.." What? That must be somebody else's question.
More...

Just because a central bank is printing doesn't directly mean inflationary expectations are positive. Other issues such as specific industries getting weak (oil) can lead to banks not allowing credit and causing bankruptcy etc.

Due to these contradicting forces and many other reasons that are not even directly related it's not easy to use fundamentals to speculate. Theory is one thing and most likely it will help in figuring out what happened after the fact. But there are those who do use fundamentals well. I am not one of those people.

Gringo
 
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