President announces Strategic Insurance plan and stock market falls
The Buenos Aires stock market fell 3.6% on Tuesday to 2,368.96 points as investor fears grew about more interventionist policies by the government of President Cristina Fernández de Kirchner.
The fall came soon after the president announced a new National Strategic Insurance Plan. The plan will oblige insurance companies to invest part of their portfolios in infrastructure and production projects. The amount an insurance company will be required to invest will vary depending upon the nature of the insurance company. Labour risks insurance companies are expected to allocate 5-10% of their portfolio and for general insurance companies the figures are 10-20%.
There was further concern regarding a new capital market law which was announced by Economy Minister Hernán Lorenzino. The new law is expected to ‘promote the power of the National Securities Commission (CNV) to intervene in financial markets’. The president is reported as saying that the new law will allow the CNV to create new financial instruments, involve the public sector more, eliminate self-regulation and increase state oversight to ensure transparency.