Down one day and up the next -- depending on how the political winds are blowing -- Argentine stocks continued their recent uptrend Thursday with shares of electric utilities Central Puerto (CEPU 1.76%) and Pampa Energia (PAM 1.40%), up 11.4% and 13.6%, respectively, joining financial company Grupo Supervielle (SUPV), which is also up 13.6%, as of 2:50 p.m. EDT.
Why are the stocks moving higher? It's not because President Mauricio Macri's chances of winning re-election have improved. And the Argentine economy doesn't look much healthier this week than it did last week.
To the contrary, one holder of Argentine bonds, asked to comment by London's Financial Times yesterday, grumbled that investors in the country still have "no clarity" on what's going on with the country's negotiations with the International Monetary Fund (IMF) regarding a bailout, and commented: "Taking a stance [on Argentine investments] at this point is stupid."
Rather, it seems investors are just grasping at straws and reacting to any suggestion of possible good news that could foreshadow a recovery. This morning, just such a straw floated in, in the form of a Reuters report asserting that "Argentina's country risk improved on Thursday for the second consecutive day."
Reuters then cited economist "Gustavo Ber of local firm Estudio Ber," who predicted that "Argentine assets are warming up for a technical rebound."
What's the basis for that guess, and what's the likelihood it will prove prescient?
Reuters notes that "the peso held its ground on Wednesday and bonds rose." But I think the best case that can be made for Argentine stocks right now is that they've gone down so much and so suddenly that a lot of risk really has been squeezed out of them.
Since the end of July, Grupo Supervielle shares have lost 60% of their value, Pampa Energia 65%, and Central Puerto 68%. If you agree with Warren Buffett that the best time to buy stocks is when everyone else is afraid of buying stocks, there's more than enough fear to go around in Argentina right now.
Seeing as so many risks have already been realized, maybe the country's risk level really is lower today than it was a month ago. Maybe today really is a good time to buy. It's certainly a better time than it was on August 9, before this whole mess began.