Stocks fall as Argentine government targets YPF

April 16, 2012, 6:39 p.m. EDT

LOS ANGELES (MarketWatch) — Argentina’s equity benchmark dropped Monday, with shares of YPF SA halted in Buenos Aires as the government took a long-awaited step toward control of the oil and gas producer.

Argentina’s Merval index /quotes/zigman/1467195 AR:MERV -1.70% , tracking 15 issues, fell 1.7% to 2,459.56, with holding company Sociedad Comercial del Plata /quotes/zigman/1371823 AR:COME +2.80% and Tenaris /quotes/zigman/314529/quotes/nls/ts TS +0.11% the only advancers, up 2.8% and 0.8%, respectively. The holding company has interests in the energy and real-estate sectors, among others. Tenaris makes steel tubes used by the oil industry.

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YPF’s shares /quotes/zigman/129506 AR:YPFD -2.44% fell 2.4% to 116 pesos ($26.40) before they were halted, leaving the stock’s year-to-date loss at 30.8%.

Argentina’s president, Cristina Fernandez, said Monday that her administration had sent a measure to Congress seeking approval of a 51% government stake in YPF. YPF is majority owned by Spain’s Repsol SA /quotes/zigman/4261160 REPYY -3.99% /quotes/zigman/184926 ES:REP +2.28% .

U.S.-listed shares of YPF /quotes/zigman/129950/quotes/nls/ypf YPF -11.16% were down 11% at $19.50 when they were halted at 1:22 p.m. U.S. Eastern time.

Takeover worries have dogged YPF this year as Kirchner has accused the energy industry of insufficiently investing in exploration and production, leading to higher importation of fuel and natural gas by the country. A number of local provinces where oil is produced had stripped operating licenses from YPF.

The takeover measure needs a two-thirds majority in both legislative chambers. The measure will be subject to “heated debates” between lawmakers because it “constitutes a new level of intermission of the government within the private sector in Argentina,” Enrique Alvarez, head of Latin American research at IDEAglobal, said in a telephone interview.

Ultimately, the measure will probably be approved as it’s unlikely “the government would risk such a visible and critical step without having total trust in that they will have the backing to push this through,” he said.

“Going forward, you are going to see a severe retrenchment of external investors in looking at Argentina,” said Alvarez.

When nationalism and expropriation “come back into the government lexicon, those are terms that have no fit whatsoever in the current, broader scheme of financial markets and of investments around the globe,” he said.

At Capital Markets, emerging market economist Michael Henderson told clients that there is now “a realistic threat of reprisal from the Spanish authorities — something which is only likely to add to the growing sense of Argentine isolation from international markets.”

Shares down in Mexico, Brazil

Elsewhere, Mexican stocks fell Monday. They pulled back from earlier gains that had followed a sharp rise in monthly retail sales in the U.S., Mexico’s largest export market. The market also moved forward after a small “flash crash” at the end of last week.

Mexico’s stock exchange said Monday it suspended trading by the local brokerage house of Bulltick Capital Markets. The move followed an incident Friday in which erroneous trades deepened the loss on the IPC equity index toward the end of the session. Read about the Bulltick trading suspension in Mexico.

The IPC index /quotes/zigman/1475587 MX:IPC +0.15% finished Monday’s session down 0.2% at 39,054.84.

In Sao Paulo, the Ibovespa /quotes/zigman/1467794 BR:BVSP -0.24% closed off 0.2% at 61,954.55. Chile’s IPSA /quotes/zigman/1467792 CL:IPSA -0.18% fell 0.2% to 4,519.46.

 

Carla Mozee is a reporter for MarketWatch, based in Los Angeles