Argentina's GDP Warrants Sink as Stocks Rise

By Taos Turner

BUENOS AIRES--Securities tied to economic growth in Argentina had a bad day Tuesday, falling across the board even as the stock market posted gains.

So-called GDP warrants fell sharply for a second consecutive day, in one case dropping by almost 7%, a day after a Bank of America report said the warrants were pricey.

The TVPA warrant fell 5.6% to 45.40 Argentine pesos ($9.93); the TVPE fell 3.7% to ARS50.30; the TVPP fell 4.7% to ARS6.75; the TVPY sank 6.9% to ARS44; and the TVYO slid 5.5% to ARS44.

"We believe the GDP Warrants are rich given the unlikely prospect of GDP coming in above the dividend threshold in the next 2 years, the current litigation risk, and the current price which stands almost 3 times as high as the tail in June 2012," the Bank of America report said.

The securities often rise or fall sharply, reflecting changing expectations economic growth as well as pricing considerations.

Though bonds in general performed poorly, stocks turned in a solid performance, putting the Merval index above 3,000.

The Merval benchmark stock index rose 0.82% to 3,018 in trade totaling ARS47 million ($9.5 million).

The state-run oil and gas company YPF SA (YPFD.BA, YPF) led the gains, rising almost 5% to settle at ARS108. It was the most traded stock of the day.

The financial conglomerate Grupo Financiero Galicia SA (GGAL.BA), which was also heavily traded, fell 0.8% to close at ARS4.74. Banco Macro (BMA.BA, BMA) was the third-most traded share. It was unchanged, though, closing at ARS12.50.

The black-market exchange rate was little-changed, trading for ARS7.06 to the dollar, according to financial newspaper El Cronista. Black-market activity has been elevated because of strong demand for dollars from Argentine tourists who have needed dollars to use on overseas vacations.

The official exchange rate, which is regulated by the central bank, closed at ARS4.9310 to the dollar on the MAE wholesale currency market, compared with ARS4.9305 in the previous session.

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