Here Are the European Stocks Moving on Argentina’s Turmoil
Here Are the European Stocks Moving on Argentina's Turmoil
(Bloomberg) -- European companies for the most part have little exposure to Argentina, thanks to decades of economic boom and bust and wild currency swings. The few that do have sizable operations in the country are paying the price this week as a political upset roils markets.
Shares of Spanish security services company Prosegur Cia de Seguridad SA and its Prosegur Cash SA unit have dropped 17% and 22%, respectively, this week. Tenaris SA, a Luxembourg-based maker of steel tubes that has its roots in Argentina, has fallen 4.4% while Italian construction company Salini Impregilo SpA has lost 4.2%. Telefonica SA has declined 2.7%.
The Argentine currency and stocks and bonds plunged following President Mauricio Macri’s stunning rout in primary elections over the weekend. Macri’s loss raised the prospect a populist government may take over and trigger another debt default.
While not all companies break out how much revenue they get from individual countries, it’s clear that some have substantial exposure.
Prosegur Cash, which handles transportation and management of cash, has nearly 5,000 staff in Argentina, more than any country except Brazil. Its parent, Prosegur, employs about 18,000 people in Argentina.
Tenaris, an Italian-listed company that makes tubes for the energy industry, began as Siderca SAIC, an Argentine pipe producer, in 1948, according to Tenaris’s annual report. The company began expanding beyond Argentina in the 1990s. About 24% of its employees work in Argentina, including its senior managers, and the country’s high inflation, currency swings and energy shortages are mentioned as a key risk of the business.
Salini Impregilo has won two contracts to work on a project to clean the Riachuelo river in Argentina, and the company also has investments in toll roads and energy and water facilities in the country.
Spanish phone company Telefonica and Belgian brewer Anheuser-Busch InBev NV have a small exposure to Argentina as well, although analysts see a limited impact on the shares from the current turmoil. The country accounts for just 2% of AB InBev’s underlying earnings, according to Bernstein analyst Trevor Stirling. Telefonica’s operating cash flow will probably take a hit of less than 0.5 percentage point, Bloomberg Intelligence notes.
Spanish betting firm Codere SA also has been hit, with its shares sinking 6.6% on Monday, and its bonds plunging as well. Argentina accounted for 25% of Codere’s adjusted profit in the first quarter, according to company filings.
--With assistance from Charles Penty, Chiara Albanese and Albertina Torsoli.
To contact the reporter on this story: Phil Serafino in Paris at pserafino@bloomberg.net
To contact the editors responsible for this story: Celeste Perri at cperri@bloomberg.net, Namitha Jagadeesh, Kasper Viita
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