Before fully recovering from the after effects of the global financial crisis, the banking industry is likely to face the new challenge of divergent monetary policy approaches in the major developed countries.
In assessing the investment opportunities in the emerging world, we believe that these economies are likely to sustain faster growth rates when compared to the developed countries, for the next few decades.
“Everything I’ve got is a result of my own achievements, and my own defects too”
— Cristina Fernandez in an interview to The Guardian
From soccer broadcast rights to creating jobs to beef imports. This is the range of issues that Argentinean President Cristina Fernandez de Kirchner has handled just within a week. Kirchner’s efforts are part of strategies to cushion the impact of the global financial crisis on Argentina, South America’s second largest economy. After six years of growth of at least 6.8% a year, Argentina’s economy is expected to contract by 3.5% in 2009, according to the Economist Intelligence Unit. This year, the country has been downgraded to the status of a frontier market. It appears Fernandez has a tough job on her hands.
On the outside, Fernandez is all decked out with immaculately coiffed hair and pearl-white teeth, but beneath the make-up, Argentina’s glamorous president is an intelligent orator, firebrand barrister and a steely senator. Born in La Plata, Buenos Aires, Fernandez studied law at the National University of La Plata, where she met her husband Nestor Carlos Kirchner. Following her marriage, Fernandez and her husband established a successful law practice in Santa Cruz in southern Argentina. She began to be involved in politics with Kirchner and was elected to the Santa Cruz provincial legislature in 1989. Kirchner went on to become the president of Argentina and Fernandez proved to be the main pillar for his successful campaign.
During his presidency, Fernandez became an ambassador for his government and her passionate speeches and fiery demeanor were compared to those of the former First Lady of Argentina, Eva Peron. When Kirchner decided not to run for re-election, he instead nominated his wife. Fernandez won with a big margin to become the first woman president of Argentina in 2007.
When the then 55-year-old Fernandez took over, the Argentinean economy was facing myriad challenges like inflation, union demands for higher salaries and the lack of private investment in key areas. Previous Argentinean leaders, including her husband, had given in to pressures from diverse interest groups like trade unions and farmers. Nestor Kirchner had allowed the economy to overheat, but earned himself huge popularity in the process by refusing to take stringent actions like raising energy prices or holding down salaries.
When Cristina Fernandez came to power she set to task immediately. One of her first actions was to try and raise taxes on food exports, one of the most profitable commodities in Argentina. But this led to the first major political crisis of her presidency. A tug of war ensued between Fernandez and the farmers, who claimed that the increase would hurt their profits. The farmers organized large-scale strikes and Fernandez retaliated by setting up road blocks, disallowing grain trucks from passing. She accused the farmers of holding the country to ransom and asked them to act “as part of a country, not as owners of a country”. With such displays of inner steel, comparisons have been drawn between Fernandez and former British Prime Minister Margaret Thatcher, and early in her political career, the Argentine president was dubbed “Queen Cristina” for her imperious personality.
On the downside, Fernandez, who ranked 11th in Forbes’ Most Powerful Women, took the blame for her party’s losses in the mid-term elections to the Argentine Congress in June as voters were dissatisfied with her handling of farm strikes and a slowing economy. The aftermath of the June elections dealt a heavy blow to the ruling Peronist Party, and with this, Fernandez lost her grip on the legislature and ended her control of Congress. She is facing more criticism now for imposing price controls on food, especially beef, Argentina’s staple.
Fernandez is said to be obsessed with her fitness and image, drinking from one chosen brand of mineral water and wearing designer labels. But as Fernandez observed, “I’ve always got dressed up, caked on the make-up. Would I have to dress like I was poor in order to be a good political leader?” And it appears that Argentina’s first woman president will not only need to be a shrewd political leader, but draw from her inner strength and brainpower now more than ever.
Thomas White International is an independent, employee-owned asset management firm with offices in Chicago and Bangalore, India. Employing a value style, our investment approach blends a highly detailed, quantitative equity valuation method, with disciplined stock selection by a seasoned investment team. Backed by an exhaustive research process, the breadth of our research allows us to spot opportunities in relatively less known regions, while the depth of our process seeks to reduce risks through detailed evaluation of the regulatory environment, industry competition, and management quality. From mutual funds, to separately managed accounts, and institutional portfolios, Thomas White International now offers a large bouquet of asset management offerings, covering international, global, and emerging markets mandates.
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