Banco Macro Dividend Payment Suspended

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Argentina has taken center stage of global politics in recent weeks for all the wrong reasons. The country’s expropriation of the oil company YPF (YPF) from its Spanish parent Repsol (REPYY) has been met with widespread condemnation and retaliatory actions by Spain. In addition, already nervous foreign investors are further pulling their capital out of Argentina. As a result of this dramatic action by President Cristina Kirchner, Argentine ADRs have fallen heavily in the past few days with one commentator calling investors to sell all Argentine ADRs immediately.

Of the 17 Argentine ADRs trading on the NYSE and NASDAQ most are down YTD. YPF is down about 58% YTD.

It is too early to confirm that Argentina is on the way to become the next Venezuela or even Cuba with one nationalization. Investors may want to avoid knee jerk reaction and try to monitor the situation closely.

Other than the energy sector banking is a key sector to keep an eye on. The three Argentine banking institutions listed on the US organized exchanges are Banco Macro (BMA), BBVA Banco Frances (BFR) and Grupo Financiero Galicia (GGAL). All the three ADR are off by 50% or more in the last five years.

Banco Macro used to solid dividends until recently. When the bank announced the fourth quarter, 2011 earnings it mentioned the suspension of dividend payments due to a recent regulatory change.  The YPF nationalization and the dividend suspension news has pushed the ADR price to under $16.00 on Friday.In late 2010 Banco Macro ADR traded above $54.00 a share.

From the 4Q, 2011 earnings report:

Based on BCRA Communication “A” 5273, all financial entities that wish to distribute dividends, must have an excess capital of 75% (before it was 30%) after the deduction of proposed cash dividends over the required capital. Based on the above, Banco Macro will not be able to distribute dividends.

Disclosure: Long BMA

Five Latin American Utility Stocks To Consider

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The never-ending European debt crisis has flared again in recent weeks with Spain taking the center stage this past week. While Portugal, Italy, Ireland and Greece were in the news in the past couple of years this is the first time Spain is becoming the focus of investors’ attention.

U.S. equity markets have performed well so far this year compared to many foreign markets. Among the developed countries Spain’s IBEX 35 is down 15.4% YTD and Italy’s FTSE MIB is off 4.8% YTD while the S&P 500 is up 9.0% YTD. Most emerging markets are also in the positive territory with Brazil’s Bovespa and Chile’s IPSA up 9.4% and 8.4% YTD respectively.

As the European crisis drags along and global economic growth worries continue, investors may want to shift some of their equity allocations to stable and dividend-yielding stocks. Electric utilities in Latin American provide some of the attractive investment options in the foreign utilities space.

The following five Latin American Electric Utilities currently pay dividends of over 3%:

1.Company: Empresa Nacional de Electricidad SA (EOC)
Current Dividend Yield: 3.63%
Sector: Electric Utilities
Country: Chile

2.Company: Cpfl Energia SA (CPL)
Current Dividend Yield: 5.20%
Sector: Electric Utilities
Country:Brazil

3.Company:Copel Companhia Paranaense de Energia (ELP)
Current Dividend Yield: 3.44%
Sector: Electric Utilities
Country:Brazil

4.Company: Companhia Energetica de Minas Gerais (CIG)
Current Dividend Yield: 6.69%
Sector: Electric Utilities
Country: Brazil

5.Company: Centrais Eletricas Brasileiras SA (EBR)
Current Dividend Yield: 6.47%
Sector: Electric Utilities
Country: Brazil

The above five stocks offer a starting point for investors looking to add Latin American utility stocks to their portfolios. It must be noted that unlike utilities in the U.S.,  emerging market utilities including those in Brazil and Chile will be volatile but offer strong growth potential.

Disclosure: No Positions

Knowledge is Power: Price Fixing, Mexican Banks, Market Boom Edition

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Four Numbers Add Up to an American Debt Disaster: Caroline Baum

The global financial crisis: What caused the build-up?

Map: The world’s new ocean-spanning fibre-optic cables

Lawrence Solomon: A world awash in oil

Investors must plan their exit strategies

The long bust

Investing in a changing China: an uncertain outlook

Price fixing

Mexico Banks Resilient, But Global Risks Need Care

Is this market boom for real?

Click to enlarge

Genghiz Khan Statute, Mongolia

Courtesy: Sibirksy Extreme

New Peruvian ADR: Cementos Pacasmayo

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Pacasmayo Cement of Peru started trading on the NYSE from Feb 13, 2012 with the ticker CPAC.Pacasmayo  is the second Peruvian cement company to trade on the US markets. Here is a brief overview of this new ADR from the press release:

Cementos Pacasmayo is a leading Peruvian cement company, and the only cement manufacturer in the northern region of Peru. They are among the most profitable publicly-listed cement manufacturers in the world, based on operating margins over the past three years. They produce, distribute and sell cement and cement-related materials, such as concrete blocks and ready-mix concrete. Their products are primarily used in construction, which has been one of the fastest growing segments of the Peruvian economy in recent years. They also produce and sell quicklime for use in mining operations.

They sold 20 million ADRs at $11.50 per share raising $230.0 million. The ratio of ADR to common share is 1:5. After trading as low as $11.26 the stock closed just above the IPO price at $11.57 yesterday.

Founded in Lima, Peru in 1949 Pacasmayo is the second largest cement company in Peru. The company has operations in the north and east of the country with cement plants in Rioja and Pacasmayo, and ready-mix concrete plants in Chimbote, Trujillo, Pacasmayo, Piura and Cajamarca. Its common shares were listed on the Lima Stock Exchange under the ticker CPACASC1 in 1995.

For more information check out their corporate website here.

Cementos Lima is the biggest cement producer in Peru and its stock trades on OTC market under the ticker CEMTY.