Argentine securities regulator sees market boost from tax amnesty

By Walter Bianchi and Gram Slattery

BUENOS AIRES (Reuters) – Argentina’s securities regulator is “optimistic” that tax amnesty laws introduced by the new center-right government will boost investment in the local market, the body’s head told Reuters in an interview on Monday.

Under new laws that go into effect on Monday, Argentines with money abroad can legally repatriate funds at a steeply discounted tax rate by investing them in local mutual funds or government bonds.

The securities regulator, the CNV, had received “a lot of interest” regarding the fund option, said Marcos Ayerra, who was appointed as CNV head after President Mauricio Macri succeeded the leftist administration of Cristina Fernandez in December. He added that the mutual fund industry, still a minnow in Argentina, should now grow quickly.

“What we’re looking to do is mobilize the industry, so there are new [mutual] funds, and thus new projects,” he said in his office in downtown Buenos Aires.

Financial instrument investment has long been light in Argentina, Latin America’s third largest economy, and liquidity all but dried up under Fernandez. The benchmark Merval index comprises only 15 stocks, and volumes are a fraction of that in neighboring Chile.

But, as investors have warmed to Macri’s business-friendly policies, they are also returning to the country’s markets. Some 88 billion pesos ($5.9 billion) worth of financial instruments were issued in the first quarter of 2016 in Argentina, versus 44 billion pesos in the same period last year, Ayerra said. The stock exchange has also seen its first two IPOs since 2010 this year.

In order to keep up with market growth, Ayerra said the CNV would have to adapt, with a particular focus on corporate governance standards and making the market attractive for foreigners.

Potential foreign investors in Argentine stocks have often been driven away by the administrative difficulties of trading locally, often settling for ADRs, which are essentially surrogate stocks issued by a U.S. bank that trade on a U.S. exchange.

“We can’t have a mature and solid capital market, if we don’t have a mature and solid regulator,” Ayerra said. “We’re looking to simplify the regulatory burden…such that there are more foreign investors looking to invest locally.”

Ayerra added that the regulator was looking to take a more active approach with regulations relating to short-term speculation, to which Argentina’s stock market is susceptible, given its small size and low liquidity.

(Reporting by Walter Bianchi and Gram Slattery,; Editing by Rosalba O’Brien and Andrew Hay)