Grupo Supervielle SA (NYSE:SUPV), Grupo Financiero Galicia (NASDAQ:GGAL), BBVA Banco Frances S.A. (NYSE:BFR), Transportadora de Gas del Sur SA (NYSE:TGS), and Banco Macro SA (NYSE:BMA) -- that's a mouthful of words to identify just five companies from Argentina, but they're all part of a big story coming out of that country today. At one point or another, these five stocks were up 10% or more this morning.
As of 1:40 p.m. EDT, these Argentinean stocks are still up -- 15% for Grupo Supervielle, 13.7% for Financiero Galicia, 9.7% for BBVA, 9.6% for Transportadora, and 8% for Banco Macro.
So what's happening in Argentina today that could explain why five separate companies -- most, but not all, of which are banks -- would see their stocks leap simultaneously? I can answer that question in three little letters: IMF.
On Thursday, the International Monetary Fund announced it intends to finalize a deal to provide Argentina with $50 billion in emergency backup financing "as rapidly as possible," aiming to stabilize the Argentine economy and halt an economic catastrophe that has seen the Argentine peso lose half its value this year. This comment followed a statement from Argentine Economy Minister Nicolas Dujovne yesterday, expressing "enormous confidence" that the two sides could strike a deal for accelerated disbursements of the loan funds.
Aiming to make it easier for IMF to say "yes" to the loans, Argentine President Mauricio Macri has already laid out plans to eliminate certain government ministries, cut spending, and impose new taxes on exports -- all measures aimed at balancing the budget and matching income with expenditures.
These moves, combined with encouraging words from IMF, helped to strengthen the Argentine peso 1% against the U.S. dollar yesterday, and boosted the peso a further 3% today -- boosting the value of the profits earned by Argentine companies in the process. All this belt tightening isn't going to be popular with Argentine voters, however, and protests are already erupting in Buenos Aires.
Whether the currency situation stabilizes, and whether today's improvements in stock price can hold, may depend on whether the government is able to stick to its convictions and not cave in to the protests.
Failing to do so, investors could see the same five stocks that recorded such strong gains today fall once again tomorrow.