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8/13/19

Exclusive: How Argentina's stock operators ripped off the market

To understand how a group of people in Argentina ripped off the Northern market players to the tune of many hundreds of millions of dollars, one must return to the action seen in Argentine stocks on Friday August 9th, last trading day before the PASO elections of the weekend. On that day and for no apparent official reason, the main MERVAL index jumped 7.94% on outsized volume and many of the stocks on the list made 10% and 20% improvements as a raft of new money came in from instos and funds from North America, Brazil and Europe.

They did so because they thought they were in the possession of super secret information, but as things turned out they were done in much the same way as the Duke Brothers in Trading Places. Our Ackroyd and Murphy this time were  a private consultancy company called Elypsis (of Argentina) and a Brazilian investment bank BTG Pactual (which is part of UBS, class action lawyers may be interested in knowing) who on Friday morning both published private voter intention polls that put sitting President Mauricio Macri in a stronger position than the final sets of official polls released before the blackout period, one week before. As a matter of fact, Elypsis put Macri on 38% and Alberto Fernández on 37%, while BTG Pactual put Macri on a three point advantage. As a result of these private polls, published at almost exactly the same time Friday morning Americas time to coincide with the opening of the market (not suspicious at all), traders piled into everything Argentina expecting a strong result from Macri that would place him in the box seat for the October first round election (with a view to getting the re-election nod in the November round two run-off).

However, and to literally translate one of my favourite dry humour Spanish sayings, "the reality is other". Sunday came, Argentina voted, Fernández beat Macri by 15 points and both the Elypsis and BTG Pactual polls were shown to be the tissue of fabrication and lies that they most definitely were. Traders who had bought the Merval like there was no tomorrow (and the big question is "from who?") were left strung out to dry, the Merval immediately dropped 10%  at which point its standard circuit breaker clicked in, then on re-opening the stampede for the door saw the Merval drop 48% on the day, the world's second largest ever one day market drop anywhere in the last 50 years. 

When rip-offs are this big and done this well, I am forced to sit back and applaud. The people behind the Elypsis and BTG Pactual polls have pulled off one of the biggest white collar crimes of all time, right in front of your noses and instead of it causing an international financial scandal, it takes a pissant blog in a dark corner of the interwebnetpipes to point it out to you all.