Argentina is among the largest economies in Latin America with a GDP of approximately US$450 billion. The country boasts vast natural resources in agriculture and energy. In terms of area, it is the 8th-largest country in the world and second-largest country of South America after Brazil. Argentina possesses lithium and gas reserves as well as fertile lands. The country has a developed large-scale livestock industry. Argentina is among the world’s largest exporters of soybeans, wheat, and meat. It is also one of the major producers of wool and wine, although the bulk of its wine is supplied to the domestic market.
However, the country’ development is impeded by a number of factors. First of all, urban poverty in Argentina has reached more than 40% of the population, with 10,7% of urban dwellers living in extreme poverty. To address the issue of poverty, the government has put a special emphasis on social spending programs, such as the Universal Child Allowance for Social Protection aimed at children and adolescents living in poverty.
Secondly, the COVID-19 pandemic delivered a severe blow to the economy of Argentina, resulting in its GDP contraction by 9.9% in 2020. The country’s vast natural resources helped it recover as the coronavirus pandemic shifted global demand from services to physical goods. As of January 2022, exports from Argentina increased by 12.9% year-over-year to $5.547 million, due to higher sales of primary goods (79.6%), industrial manufacturing (32.2%) and fuels & energy (2.5%). Nevertheless, an estimated 10% growth rate in 2021 was not sufficient for restoring the country’s GDP to the pre-pandemic peak in 2017.
Thirdly, despite the government’s measures to freeze prices and limit exports on grains and meat, inflation soared to almost 51% in 2021 — one of the highest rates in the world. The largest price increases last year accounted for the hotel & restaurant sector (65%), transport (57%) and food (50%). According to a recent survey of analysts and banks, prices are expected to rise 55% over the next 12 months. “During 2021, the government tried to anchor inflation by basically regulating the price of utility tariffs and the exchange rate,” said Hernán Fletcher from Argentine Centre of Economic Policy. “Although it certainly was not a success, without this, inflation would have been higher.” To protect Central Bank reserves, Argentina introduced strict exchange controls in 2019, allowing individuals to purchase only $200 dollars a month at the official rate.
Reducing inflation requires monetary policies that may entail economic growth slowdown and the rise in unemployment. However, Argentina lacks the sufficient level of public trust to implement such policies. The country ranks 78th out of 180 countries in Transparency International’s Corruption Perceptions Index, while the percentage of informal employment in Argentina stands at 46% of the total employed population.
The Country of Nine Defaults
Since the times of President Juan Perón, Argentina has a long tradition of pro-worker and protectionist politics. Moreover, some of its regional neighbors, such as Venezuela, Peru, and Cuba, have leftist governments. The modern wave of socialism in the region was partially considered as a response to failed IMF’s policies in the 1980s and 1990s. Argentina is the country that has suffered severely and experienced nine defaults. “Argentina has a history of borrowing too much with insufficient fiscal and monetary restraints,” Martin Schubert, CEO of European InterAmerican Finance Corp, told Bloomberg. He has been investing in Argentina for 40 years and describes this problem as “a vicious cycle.”
The first episode was in 1827, only 11 years after independence. During the period of the military dictatorship in early 1980s, Argentina borrowed funds, primarily from U.S. and British banks, to finance infrastructure projects and industries. As a result, the country’s debt surged from $8 billion to $46 billion. In 1990, the average inflation rate skyrocketed as much as 20,000%, GDP dropped by more than 6% while imports decreased 21%. At the beginning of 1990s, when Peronist Carlos Menem was in power, Argentina’s foreign debt increased to more than $100 billion. In 2001, Argentina faced the largest default, with payments being halted on $95 billion worth of bonds. That led to restructuring deals with creditors under President Nestor Kirchner and then his wife President Cristina Fernandez. In 2014, Argentina defaulted once again, after which the conservative, center-right politician Mauricio Macri came to power. The country paid the holdouts and regained access to international debt markets.
Macri focused on free-market reforms and attracted billions of dollars of financing from foreign creditors. Nevertheless, the country entered a deep economic crisis and in 2018 the IMF approved a record $56-billion loan package for Argentina to help it stabilize the economy. Argentina ended 2018 in recession and on April 4, 2019, tens of thousands of Argentinians protested against austerity measures. That year, centre-left opposition candidate Alberto Fernández won presidential elections, inheriting a country in a deep economic crisis.
When Alberto Fernández took office in December, he announced that Argentina was in “virtual default”. The economy shrunk, poverty increased, and the currency was tumbling. In May 2020, the government missed a deadline to pay $503 million in interest on dollar bonds and the country’s 9th default occurred. In March 2022, Argentina’s Senate voted to approve an agreement with the IMF to restructure a $45 billion debt with the IMF to avoid another default. This debt is the legacy of the loan contracted in 2018 by the government of former President Macri. Hundreds of people demonstrated in opposition to the restructuring.
Since the beginning of his presidency, Alberto Fernández took a number of measures which can be associated with a left-wing agenda. He decided to tighten restrictions on the purchase of foreign currency, claiming that “dollars are needed to produce, not to save.” The new government increased export levies on soy (from 25% to 30%), wheat and corn (from 7% to 12%), and beef (from 7% to 9%). Also, the government postponed any end-user price updates for natural gas, electric power and water utility services as well as increasing subsidies for the poor. In 2020, the Senate passed a so-called millionaire’s tax affecting approximately 12,000 of Argentina's richest people. The one-off levy was expected to bring an additional 300 billion pesos ($3.75 billion) into the budget, which would be spent on medical supplies for the fight against the pandemic, support of small and medium-sized businesses, social developments, and natural gas ventures.
Exports & Foreign Investment
The top exports of Argentina include soybean meal ($8.8 billion), corn ($6.2 billion), delivery trucks ($3.8 billion), soybeans ($3.5 billion), and soybean oil ($3.4 billion) as well as meat, oil-cake. The major export destinations are Brazil ($10.3 billion), China ($6.9 billion), the USA ($4.4 billion), Chile ($3.1 billion), and Vietnam ($2.8 billion). As of 2019, Argentina was the world’s largest exporter of soybean meal, soybean oil, bran, and groundnut oil. The main imported goods include cars ($2.3 billion), refined petroleum ($2.2 billion), vehicle parts ($2 billion), petroleum gas ($1.5 billion), and soybeans ($1.4 billion), purchased primarily from Brazil, China, the USA, Germany, and Paraguay.
Argentina is part of the Mercosur, a South American trade bloc established by the Treaty of Asunción in 1991. The main purpose of Mercosur is to promote free trade and the free movement of goods, currency, and people in the region. However, this trade bloc is facing numerous problems including ideological differences between its member countries and a weak institutional structure. The main trade partner of Argentina is Brazil, followed by China, the USA, Germany, Chile, and Paraguay.
Argentina has free trade zones located throughout the country and the special customs area, which covers all of Tierra del Fuego Province. Argentine law defines a free trade zone as a territory where neither the inflows or outflows of exported end products are subject to tariffs or other taxes. The Argentinian government offers multiple investment promotion programs, which do not make any distinction between domestic and foreign investors. Some programs require investments in a specific industry or region, while others offer refunds on VAT for local production of capital goods. The government has also established a special fund providing low-cost credits to small and medium-sized businesses and launched a program aimed at boosting competitiveness. Last year, President Alberto Fernandez signed a decree that removed export taxes on automobile exports that exceed the sales of 2020.
Unlike in some other countries, full foreign equity ownership of Argentinian businesses is not restricted, except for the media and air transport companies. Also, there are some restrictions on foreign ownership of lands, bodies of water. Nevertheless, the rising sovereign debt and the severe effects of the Covid-19 pandemic have led to the decline in the foreign direct investment in Argentina. In 2020, foreign direct investment in Argentina fell by 47%, whereas overall foreign direct investment flows in Latin America and the Caribbean region declined by 37%. Argentina suffered a protracted shutdown of the industrial sector, which resulted in a decreased economic activity.
In the field of merger and acquisition activity, there was disinvestment worth $290 million after major international investors, such as the U.S. companies Schlumberger, Walmart, and MetLife as well as the French company Danone sold their local businesses to regional or domestic investors. On the other hand, there were many notable acquisition and investment deals. In January 2021, Accenture (NYSE: ACN) purchased Wolox, a leading Argentinean software technology company that specializes in integrated services including digital business design and product creation. In February 2022, Chinese mining firm Zijin Mining Group Co Ltd said it would invest $380 million to build a plant in Argentina that would produce 20,000 tons of lithium carbonate per year.
Investment Opportunities by Economic Sector
In 2020, the share of agriculture in the country’s GDP was 5.9%, industry contributed over 23%, while the services sector was the largest contributor with a share of more than 54%. According to data from the Argentine National Institute of Statistics, biotechnology and knowledge-based service sectors are experiencing the fastest growth in the country. Last year, the US Department of State issued a report on the investment climate of Argentina, highlighting infrastructure, health, agriculture, IT, energy and mining as the main sectors for investment and trade.
Agriculture & Agribusiness
Although agriculture in Argentina is an important source of export revenues, it constitutes a small percentage of the national GDP and employs a small portion of the workforce. At the same time, a large sector of Argentina's manufacturing industry is involved with the processing of agricultural products. The country’s agriculture sector is characterized by great potential and diversified production. At present, approximately 15% of the country’s area is cultivated and almost half of the territory is occupied by livestock farming. The country is also the second-largest area in the world for organic food production. The agriculture sector accounts for a quarter of Argentina’s exports, making the country a significant exporter of agri-food products. The main agricultural products include soybeans, corn, wheat, wool, wine, meat, fruits, and vegetables. Soy is the main crop in Argentina, occupying almost half of the cultivated land. As of 2019, Argentina was the world’s third-largest exporter of soybean, behind the USA and Brazil, as well as being the biggest exporter of soybean meal and soybean oil.
In 2021, Argentina was the 6th-largest beef producer in the world, with 3.1 million tons of beef and veal produced that year. It is also the 5th-largest exporter of beef and has been steadily increasing its exports. Moreover, in December, the government said it would loosen export restrictions on beef that were introduced to curtail inflation.
Argentina may also become a major pig exporter. Over the last two decades, the country’s pig industry has been growing at a rate of more than 8% a year, becoming the most dynamic sector in Argentina’s economy. In 2021, national pork production amounted to 694,880 tonnes, a 6% increase from 2020 or 410% more in comparison to 2002. China is responsible for 67% of demand and is also the country’s strategic partner for pigs in terms of investment. The two countries signed a $ 3.8 billion deal to double pork production in Argentina by 2024. According to the agreement, 25 integrated units of 12,000 sows each will be established, including feed manufacturing plants and export-licensed slaughterhouses. Argentina expects to become one of the world’s major pork suppliers by 2030. And in April of 2021, the industry leaders presented their 2020-2030 strategic plan in the Agro-Industrial Council of Argentina.
Argentina is a strong net exporter of dairy products and imports only limited quantities of these products from neighbouring countries. In 2019, La Seremísima was the most popular dairy brand in the country, while Ilolay was the second most frequently purchased. Products under the brand of La Seremísima are produced by Mastellone Hermanos S.A., which is partially owned (48%) by Grupo Arcor, an Argentine private company specialized in confectionery. More than 25% of dairy production in Argentina goes into export channels, with the top destinations including Brazil, Algeria, Russia, Chile, and China. There are approximately 10,000 dairies in Argentina, of which 80% have fewer than 500 cows. Smaller farms lean more towards grazing, while larger dairies typically purchase compound feed.
Molinos Rio de la Plata S.A. (MOLI.BA) is the largest and oldest packaged food company in Argentina and a large exporter of sunflower processed oil. The company produces cooking oils, soups, rice, pasta, flour, sausages, hamburgers, cake premixes, fruit juices, and coffee as well as being engaged in crop milling and supply of raw materials for further processing. Molinos Agro S.A. (MOLA.BA) produces soybean meal, oil, corn, and provides animal feed. Carlos Casado S.A. (CADO.BA), which was founded in 1883, is involved in the production and export of soybeans as well as livestock breeding. Havanna Holding S.A. (HAVA.BA) is an Argentinian company that operates a chain of coffee shops in 9 Latin American countries and the USA.
Ledesma Sociedad Anónima Agrícola Industrial (LEDE.BA) offers sugar, alcohol, grains, meat, and bioethanol. Morixe Hermanos S.A.C.I. (MORI.BA), which was founded in 1901, manufactures and sells wheat flour. S.A. San Miguel A.G.I.C.I. y F. (SAMI.BA) produces fresh and processed citrus products and sells them in Argentina and abroad. Fiplasto S.A. (FIPL.BA) operates in the wood industry and produces furniture.
Manufacturing
In 2020, Argentina was the 3rd-largest motor vehicle producer in Latin America, behind Mexico and Brazil. The country was also the second market in South America for new vehicle sales. However, vehicle production in the South American nation has been declining over the past decade, and the situation was worsened by the COVID-19 pandemic. In 2020, the annual production of passenger cars and light commercial vehicles was only 257,000 units, but in 2021, production volumes increased and reached around 435,000 vehicles.
The most notable manufacturers include foreign owned subsidiaries of global brands such as Ford Argentina, Fiat Auto Argentina, General Motors Argentina, Honda Motor de Argentina, and Nissan Argentina. As for the national companies, there is Zanella, a private company making motorcycles, and Materfer, which was initially established by FIAT and now operates as an Argentine manufacturer of railway and road vehicles. The public company Mirgor S.A. (MIRG.BA) is an Argentinean technological company that manufactures and sells auto parts and consumer electronics. The company also exports agricultural commodities and oilseeds. Agrometal S.A.I. (AGRO.BA) produces and sells agricultural soil break-up and sowing machinery in Argentina.
Consumer electronics & home appliances
In 2020, the total revenues of the Argentinian consumer electronics market amounted to $6 billion, representing a compound annual growth rate of more than 30% between 2016 and 2020. In the near term, analysts expect moderate growth of the market.
“After a strong immediate rebound out of the acute phase of the Covid-19 pandemic in 2021, we forecast relatively modest growth for Argentina's consumer electronics market over the medium-term to 2025 that will mean market value in US dollar terms will still be 28% below 2017 levels,” says a report released by Fitch Solutions. “The elevated inflationary environment will be the key factor, acting as a squeeze on purchasing power growth and the local currency affordability of imported electronics devices and components”.
According to a Mordor Intelligence report, an average Argentine consumer tends to buy products that are necessity or cost-effective, which explains high sales revenues generated from certain home appliances, like cookers and ovens. The publicly traded Argentinian companies operating in the industry include Longvie S.A. (LONG.BA/), which produces and exports washing machines, dishwashers, stoves, heaters, hot water tanks, and DOMEC Compañía de Artefactos Domésticos S.A.I.C.y F. (DOME.BA), which makes gas stoves, purifiers, water tanks and heaters. Ferrum S.A. de Cerámica y Metalurgia (FERR.BA) offers toilets, bathtubs, and sanitary accessories. Rigolleau S.A. (RIGO.BA) is one of the largest glassware manufacturers in Latin America, with its product range including cups, glasses, bottles, and medical containers.
Textile industry
Argentina’s textile production is developed on the basis of agricultural products, primarily, wool and cotton. The industry is concentrated in the cities of the Pampas, where the biggest markets are situated. Approximately 90% of the producers in the industry are either micro or small companies, while large companies constitute only 1% of manufacturers. The overwhelming majority of textile and clothing production in Argentina is for domestic consumption. An example of a large company is Grimoldi S.A. (GRIM.BA), a manufacturer of clothes and footwear that sells its products under the brands of Hush Puppies, Merrell, Caterpillar, The North Face, and others. Founded in 1895 in Buenos Aires, it was one of the largest companies in Argentina in 1930.
Steel & aluminum production
The steel industry in this South American country began in the 1940s and has been slowly developing during the following decades. Argentina is the third-largest crude steel manufacturer in Latin America, accounting for 7% of total production in the region. In January 2022, Argentina produced around 354,000 tons of crude steel, which is a 17.4% decline as compared to the previous month and a 4.6% drop from the same month in 2021. The output of hot-rolled finished steel products had a month-on-month decrease of 11.4% and a year-on-year reduction of 11.8%. Ternium Argentina S.A. (TXAR.BA) is the main integrated manufacturer of flat steel products in Argentina. The company offers hot and cold rolled strips, pipes, and electro-galvanized steel sheets.
Argentina has only one aluminium smelter, Aluar Aluminio Argentino S.A.I.C. (ALUA.BA), which is also the largest one in South America. The company is engaged in quenching aluminum from the liquid state and producing manufactured products for the transportation, construction, electricity, and other industries. In 2020, Aluar had to reduce aluminum production because of the coronavirus pandemic.
Energy & Mineral Resources
Argentina is self-sufficient in fossil fuels and is a petroleum exporter. The country possesses the world’s 4th largest reserve of shale oil and second largest reserve of shale gas. Oil deposits are concentrated primarily in the Northwest and in Patagonia, natural gas fields are in the Northwest, while coal deposits are found in southern Patagonia. Argentina is also the world’s 4th largest producer of lithium carbonate — a crucial material for batteries — after Australia, Chile and China.
Other mineral reserves are not significant and widely scattered. Deposits of gold, lead, iron ore, uranium, and copper are developed. Argentina is the world’s 10th largest producer of silver, with 23 million ounces produced in 2020. At the same time, the country has a wide range of nonmetallic minerals including salt, clay, granite, and marble. A significant amount of electrical power is produced with the use of hydroelectric stations, the total capacity of which has risen significantly over the last 50 years. Argentina is also home to several nuclear power plants and is one of the main producers of nuclear power in the region. In January, the government said it would take measures to increase the country’s mining production in order to improve foreign exchange earnings. To this end, a set of new incentives for the sector will be introduced.
YPF S.A. (YPF), a large Argentinian company with a market capitalization of $3 billion, is engaged in the exploration, production, and distribution of oil and gas. The company said recently that it was going to double its crude oil production over the next 5 years to reach around 450,000 barrels per day. Transportadora de Gas del Norte S.A. (TGNO4.BA) transports natural gas in Argentina, operating around 6,806 km of pipelines. Naturgy BAN, S.A. (GBAN.BA) is involved in a natural gas distribution business. Capex S.A. (CAPX.BA), is an integrated energy company that produces and sells thermal electric and renewable power in Argentina. Pampa Energía S.A. (PAMP.BA) is the largest independent energy company in Argentina that operates in electricity generation, oil, and gas segments.
Pharmaceutical Industry
The pharmaceutical market of Argentina ranks third in Latin America in terms of size, presenting attractive opportunities for multinational companies. However, global industry players face significant competition from robust Argentine companies, which hold more than 50% of the market share. Fitch Solutions indicates other concerns for multinational companies, which includes the threat of repressive drug pricing controls and weakening intellectual property protection. At the same time, the agency notes that Argentina’s healthcare sector is expected to experience positive growth, driven by government health plans and reforms.
Laboratorios Roemmers, Argentina’s largest pharmaceutical company, is privately held and owned by the son of the founder, Alberto Roemmers. Publicly traded pharmaceutical companies include Laboratorios Richmond S.A.C.I.F. (RICH.BA) and Instituto Rosenbusch S.A. (ROSE.BA). Laboratorios Richmond offers antivirals for the treatment of HIV and HCV, as well as oncology, cholesterol-lowering, and psychiatric drugs. The company exports its products in Latin America, Asia, Africa, and the Middle East. Instituto Rosenbusch S.A. produces and veterinary products such as antiparasitic drugs, vaccines, vitamins, and hormone treatments.
Service Sector
Argentina’s service sector, which includes finance, insurance, real estate, and business services, is the largest contributor to the country’s GDP. According to Fitch Solutions, strict capital controls and high inflation are contributing to already weak confidence in Argentina’s financial institutions among domestic investors. This has historically led rich Argentines to hold their assets abroad. Banco BBVA Argentina S.A. (BBAR.BA) is the oldest private bank in the country. In the fourth quarter of 2021, the bank’s inflation adjusted net income was 1,008.8% greater as compared to the same period in 2020. Other publicly traded banks in Argentina include Banco Hipotecario S.A. (BHIP.BA) and Banco Patagonia S.A. (BPAT.BA). The latter focuses on serving individual clients as well as small and medium-sized businesses.
The fintech revolution has reached Latin America, with Argentina becoming the fourth most important fintech market in the region. The key to success of fintech companies is that they offer new financing channels to those people who previously could not access traditional credit sources. The data shows that less than a third of the Argentine population has access to bank loans. The payments segment is the biggest one is Argentinian fintech industry, while the loan segment is gaining strength and growing fast.
From 2018 to 2020, the number of fintech companies in Argentina more than doubled, reaching 268 companies. As of December 2021, the privately held fintech unicorn Ualá had attracted the most investments ($544 million), followed by private companies Brubank ($12.8 million), Moni ($5.5 million), and InvertirOnline ($4 million). The digital banking startup Ualá is expanding in other Latin American countries and in January announced the launch of operations in Colombia.
The Argentinian company MercadoLibre (MELI), which hosts the largest online commerce platform in Latin America, is also gaining ground in fintech products and services. Argentina’s e-commerce segment grew 124% over the course of 2020, after increasing by 76% in 2019, which was partly due to lockdowns imposed during the COVID-19 pandemic. Argentina is now the third-largest e-commerce market in Latin America and the Caribbean, accounting for approximately 9% of Latin America's online sales revenue. The online platform mercadolibre.com.ar accounted for 82% of all visits of e-commerce websites in Argentina, followed by personal.com.ar and amazon.com. The personal.com.ar platform is owned by Telecom Personal, a subsidiary of Telecom Argentina S.A. (TEO, TECO2.BA), the major local telephone company for the northern part of the country.
Telecommunications
Argentina is one of the largest telecommunications markets in Latin America, ranking third in the region in terms of telecom industry spending. From 2015 to 2020, the revenue of the Argentine telecom industry grew by more than 250% in nominal terms. This figure, however, doesn’t take into consideration the country’s high inflation rate. The country has a disparity in terms of internet connections. Buenos Aires has more connections than households (108%), while as many as 9 provinces are below 50% penetration.
Grupo Clarín S.A. (GCLA.BA), the largest media conglomerate in Argentina, and its main company Telecom Argentina S.A., occupy a 44.3% market share. Telefónica, a subsidiary of the Spanish company Telefónica (TEF) is second with a 14% market share, followed by Telecentro (12.4%) and Supercanal (7.05%). Small Internet operators combined have the rest. Telecentro is part of Grupo Telecentro, a private company owned by the former President of the Argentinian Lower House, Alberto Pierri. The mobile telephone market is divided between Claro Argentina — which is fully controlled by Mexican telecoms giant América Móvil (AMX) — the Spanish privately held mobile operator Movistar, and the above-mentioned Telecom Argentina S.A. The pay TV market is led by Grupo Clarín S.A. which has more than 38% of market share.
Major Argentinian Public Companies
Fourteen stock exchanges are authorized to operate in Argentina, with the main ones located in Buenos Aires, Rosario, Córdoba, La Plata and Mendoza. The Buenos Aires Stock Exchange (BCBA), which was established in 1854, is in charge of the operation of the country’s primary stock exchange. Almost 90% of all securities authorized for offering in local stock markets are traded on the BCBA. The market identifier code (MIC) of this stock exchange is XBUE. Mercado Abierto Electrónico (MAE) is a regulated over-the-counter market where all trades are done electronically. Launched in 1988, the MAE has 90 members and is controlled by the Comisión Nacional de Valores (SEC). Securities listed on the MAE include bonds, both government and corporate, treasury bills and mutual funds. Equities are not listed on the MAE.
The MERVAL is a major stock market index which tracks the performance of large Argentinian companies. After a decline in March-April, the index was up almost 30% in dollar terms in 2021, becoming one of the best performing stock markets in the world. In November of 2021, the Merval index reached its all time high of 97024.42 and at the beginning of 2022 it increased by 6.6%. According to Reuters analysts, Argentina’s stock market has skyrocketed due to the encouraging prospects for $45 billion debt talks with the IMF and the fall in COVID-19 cases.
“The post-restructuring payment outlook looks clear in years ahead, the economy is recovering, the central bank seems to have stabilized the exchange rate and slowly recover reserves,” said Sabrina Corujo from Portfolio Personal Inversiones. “We are clearly not in the best of scenarios — or close to it — but we are not under the shadow of default,” she added. Another banking analyst noted that trading volumes had increased on the Argentinian stock market, while the assets of its companies were “still undervalued.” At the same time, he recalled the continuing risks of investing in this country.
Only two Argentinian companies are included in the Forbes’ list of the 2000 largest publicly traded companies in the world — MercadoLibre (#1563) and YPF (#1692).
MercadoLibre, Inc. (NASDAQ:MELI, MELI.BA)
MercadoLibre, Inc. (NASDAQ:MELI) is Latin America’s largest ecommerce company which has experienced significant growth due to COVID-19 lockdowns. The company operates Mercado Libre online shopping platform, MercadoPago digital payment service, Mercado Fondo asset management tool, and a number of other online platforms. Around 40% of MercadoLibre’s visitors are from Brazil, while Argentina accounts for 21% of total visits. In March 2022, the company said it would invest $3.44 billion in its Brazilian business in 2022, which is 70% more as compared to the previous year.
In 2020, its net revenue increased by 73% and reached nearly $4 billion. In 2021, the company generated over $7 billion in revenue, 78% up from a year earlier. MercadoLibre’s stock has gained 658% over the past 5 years but at the end of 2021 MercadoLibre shares dropped by 21% due to macroeconomic factors. The Wall Street analysts give a strong buy recommendation for the stock with an average price target of $1620. The investment management company Baillie Gifford is the largest shareholder in the company with a 9.8% stake. Marcos Galperin, a 49-year-old CEO and founder of MercadoLibre, indirectly owns 7.7% of shares.
YPF S.A. (YPF, YPFD.BA)
YPF S.A. is an Argentinian vertically integrated energy company engaged in the exploration, development, and production of crude oil, liquefied petroleum gas, and natural gas as well as refining and distribution of oil, LPG, petroleum products, and biofuels. As of 2021, shale production represents 30% of its total consolidated production in 2021, growing 37% from a year ago. YPF S.A. operates 3 wholly-owned refineries, accounting for more than 50% of Argentina’s refining capacity. It is also the country’s leading petrochemical producer with an output capacity of 1.7 million tons per year. The company has a 54% market share in terms of diesel and gasoline sales volumes in Argentina and operates 1,632 gas stations in the country (33% market share).
Revenues for the full year 2021 amounted to $13,238 million, significantly higher than in 2020 but slightly below 2019 pre-pandemic levels. During the fourth quarter of 2021, revenues reached $3,620 million, a more than 59% increase from the same period of the previous year and 5% more than the pre-pandemic levels. That was the 7th consecutive quarter with positive free cash flow, resulting in the reduction of an outstanding net debt throughout the year. During that period the company reached the lowest net debt level since 2015.
The company was established in 1922 and is headquartered in Buenos Aires. The Argentina government is the controlling shareholder with a 51% stake, while the remaining 49% is in free float in the NYSE (80%) and the Argentinian stock market (20%). Sergio Pablo Antonio Affronti (51 years old) has been the company’s CEO since 2020. Prior to this, he served as President for YPF Tecnologia SA, a company controlled by YPF S.A. that has the largest applied research center in Argentina. He also served as President for A-Evangelista SA. which specializes in engineering and construction projects for the oil and gas industry.