That’s reason enough for Bank of America to cut its recommendation on Argentine bonds to underweight. They have returned 48 percent on average since congressional primaries last August showed Fernandez wouldn’t have enough support to seek re-election.
“Bonds have been too resilient given the strong deterioration in the economy,” Jane Brauer and Claudio Irigoyen, strategists at Bank of America said in an Oct. 7 report.
For Melhem, who moved to Argentina from Mexico when he was seven years old and lived in Buenos Aires until the second year of college before getting his bachelor’s degree in economics and international business at Babson College, the deterioration of the economy ahead of the next administration is an opportunity to buy the nation’s securities before a rebound.
“Anyone who comes in will start from less than zero, and there will be huge upside from there,” Melhem said.