Argentina’s Merval Unchanged In Light Trading

Business — By Felipe on marzo 28, 2012 at 4:00

BUENOS AIRES (Dow Jones)–Argentina’s Merval stock index was unchanged Tuesday as it closed at 2691.98 in volume totaling almost ARS41 million ($9.4 million).

The power distributor Edenor (EDN.BA) led the gains, rising almost 4.2% to ARS1.

Edenor was up despite a recent report by J.P. Morgan that questioned the company’s financial future.

“Edenor is facing cash flow constraints due to the lack of tariff adjustments and to cost increases,” the report said. “Its future depends on the government’s willingness to reestablish its financial health by granting tariff increases, which remains uncertain and politically driven.”

J.P. Morgan said Edenor will likely “be able to muddle through until year-end” as assets sales and government subsidies help make up for operating losses.

Still, the reported warned that Edenor could default “in the absence of tariff increases, particularly if the company is not successful in selling assets and maintains capex of over US$100 million per year.”

Edenor’s parent company, Pampa Energia SA (PAMP.BA), could also offer some financial support, the reported noted.

The most traded stock was the steel producer Tenaris SA (TS.BA, TEN.MI), which fell 1.2% to ARS102.55.

It was followed by Grupo Financiero Galicia SA (GGAL.BA, GGAL), which rose about 0.6% to ARS3.38.

The Global X FTSE Argentina 20 ETF fell 1.36% to $10.74.

Argentina’s TVPP 2035 GDP warrant fell almost 1.3% to ARS13.51.

The peso weakened against the U.S. dollar to ARS4.373 on the MAE local foreign-exchange wholesale market compared with ARS4.3705 in the previous session.

The central bank regularly intervenes in the foreign-exchange market by buying dollars to build its international reserves and keeping the peso on a slow path of depreciation against the dollar, which helps local exporters.

Puente brokerage said in its afternoon commentary that about $396 million were traded in the currency market.

Last year the peso weakened 7.6% against the dollar.

-By Taos Turner, Dow Jones Newswires; 5411-4103-6728; taos.turner@dowjones.com

Source: Buenos Aires Herald