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More Problems In Argentina Means Great Opportunities For Foreign Investors

07 Aug
argentina

Crisis Investing In Argentina (Again)

Today, I’d like to share this letter that, earlier this week, Steve Rosberg—friend and founder of investment management company Ushay (with projects in Argentine forestry, vineyards, and construction)—circulated to his contact list on the current situation in Argentina. Once again, change is afoot in this trouble-ridden nation, spelling opportunity for the investor.

Steve writes:

“I’m sure you already know that the government of Argentina has defaulted its public debt—yet again. This is bound to have unfavorable consequences for the people of Argentina, who are likely to see their currency lose value, and many will lose their jobs.

“However, if you are an investor with Ushay in Argentine assets or have thought of it, I wanted to send you a few lines to let you know the reasons why this need not necessarily be a major concern for you—and, in fact, why it may end up being beneficial for us all.

“Devaluation will make our products more competitive, and, in the medium term, more profitable. For example, it will increase demand of our grapes—which right now is depressed due to a slowdown in exports of Argentine wine as a consequence of the overvalued peso.

“We also expect that it will improve the margins for Fierro Hotel, which has U.S. dollar rates and peso costs.

“Timber? The same again.

Real estate? With the expectations that a viable economic and political program will generate, these will revert to reflect the intrinsic value of properties.

“We’ve been through similar situations before and are confirming that our core policy of investing with no leverage in real assets that produce income streams will keep us whole.

“The current political situation in Argentina is also looking positive: Mrs. Kirchner’s popularity is at an all-time low. She can’t be re-elected and doesn’t have the power to nominate her successor. As a result, and as a reaction of her leftist rhetoric and the current crisis, the four most probable candidates—those who have real chances of being elected—are all market friendly and of a center to center-right inclination. They are all likely to make the necessary reforms to get out of this default and to pursue foreign investment.

“We believe they don’t really have a choice, except in a matter of degrees. In this context, if the political crisis arising from default forces an earlier election—which I don’t rule out—it may not be a bad thing. And, even if this doesn’t happen, we will have a new president in 2015.

“It has been a slow and painful decade with the Kirchners, who are leaving the country pretty much in the same condition they found it in 2003. Now, like then, there will be great opportunities to invest in Argentina, and we will keep you posted of further developments.”

If you’d like more information on opportunities for investment with Ushay in Argentina, click here.

Lief Simon

Mailbag

“Lief, does the fact that a person is a citizen of the United States appear on his/her second passport? I read that this is so and thought that could make it difficult to do banking in another country or travel to countries that don’t welcome Americans.

“If this is in fact true, would getting a third passport solve that problem? That is, would the third passport show only that the holder is a citizen of the country that issued the second passport?

“If all of one’s passports show that one is a citizen of the United States, is there any legal workaround for this other than giving up one’s U.S. citizenship?

“I’m considering emigrating to Uruguay and applying for second citizenship there, while keeping my U.S. citizenship.”

J.W.

What shows up on any passport for any country is where the holder was born.

Therefore, if you were born in the United States, that will be noted on any passport you obtain from another country.

For example, our son, Jackson, was born in Ireland. That shows up on his U.S. passport.

If you were born in the United States, you’re automatically a citizen. That’s how banks around the world now are determining if someone is possibly an American. So, even if you’ve given up your U.S. citizenship, if you were born in the States, some banks will ask you for your U.S. passport as ID. You’d need to show them your renunciation certificate.