Taking eminant domain to a whole new level.
WSJ: Argentine stock, bond and currency markets are expected to be hit hard if the government moves to takeover the private pension funds later Tuesday.
President Cristina Kirchner is set to announce the complete nationalization of Argentina’s private pension funds when she reveals reforms to the country’s retirement system Tuesday, union leaders who back the measure say.
Bonds and stocks opened sharply lower Tuesday on the speculation. At 12:30 p.m. local time, the Merval index of leading shares was down 7.44% at 1,088.96 points. The benchmark discount bond fell to 54.50 Argentine pesos ($17.02) from its open at 59.50 pesos.
“The markets are going to cease to exist,” said a local economist who asked not to be named.
Lopez Leon currency trader Gustavo Quintana said: “The pension funds are very powerful institutional investors that fuel a lot of the trade volume — the market is going to shrink.”
Orlando J Ferreres and Asociados chief analyst Fausto Spotorno agreed that the loss of the approximately 2 billion Argentine pesos ($620 million) collected and invested by the funds each month would clearly have a negative effect on markets.
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