U.S. citizens must endure 55 more weeks of uncertainty before they can hope to gain some enlightenment about the economic consequences of the next presidential election. But for Argentine voters, the outcome of the nation's presidential contest is essentially a foregone conclusion, with the results virtually certain to be official in just a few days.

The current president Cristina Fernández Kirchner (@CFKArgentina on Twitter) is likely to win her re-election bid based on a booming economy, an atomized opposition and positive sentiment about her lost husband, the late President Nestor Kirchner.

In a sign of her increasing confidence, CFK called on Latin Americans to promote inter-trade among the region’s countries replacing the almost $460 billion of manufactured goods from the rest of the world imported last year. Her pitch is that focusing on building a more integrated economic reality could insulate Argentina and the regional economies from outside cyclical influences.

I have consistently told readers of this newsletter that Argentina's economic potential is not fully appreciated by investors.

Although an acknowledged global powerhouse in agricultural exports, Argentina has not prospered from the recent worldwide spurt in prices of the output from its farms and ranches. Its stock market performance has been equally dismal. The Argentine Merval index, off 22.9% year to date, is the worst performer of the major Latin American stock market gauges, below year-to-date declines of 20.6% by Brazil’s Sao Paulo Bovespa, negative 18.7% for Chile’s Santiago IPSE and a setback of 9.6% for Mexico’s Bolsa gauge.

According to The “Global Competitiveness Report 2011-2012” by the prestigious World Economic Forum of Geneva, Switzerland - “The extraordinary competitive potential of the country that benefits from a large domestic market size (22nd largest of 142 countries surveyed) and a population that has a fairly high level of education, with one of the highest tertiary education enrollment rates in the region (21st of the 142 countries), remains unfulfilled..."

The report goes on to blame Argentine politics, institutions, labor unions and basically anyone breathing in Argentina for the missed expectations.

Some of the government's actions to deal with its budget shortfall and financial needs have not been so popular in the past, especially nationalizing pensions and attempting to raise farm export taxes. Certainly, better trade dispute resolution with its 5 neighbors and the U.K. would go a long way towards increasing confidence in the political system of Argentina too.

But while there is much to worry about regarding prospects for Argentina’s economy and their stock market, that doesn’t necessarily mean investors should ignore this large, agriculturally dominant nation. If President Fernandez steers the country’s government onto a path of reform, as some expect once she is reelected, the eventual rebound could be impressive (think of the historic rebound of once near-bankrupt Apple when Steve Jobs returned and took charge).

A post-election boost to her popularity could provide her with the necessary support to confront Argentina’s problems that could be politically unpalatable for any opposition-lead government.

Last week I stressed the importance of looking beyond traditional metrics such as earnings per share trends, debt-to-equity ratios, market penetration and such when analyzing Latin American investments.

I and the team will keep a close watch on political developments in Argentina—as well as all other Latin American nations--and let you know of investment opportunities that are likely to emerge.

Read more in the attached weekly update and ...

Happy trading this week!

Rudy

It was a big week in Latin America for recovering stocks which bounced back 15-30% last week:

• Cemex SAB de C.V. (NYSE:CX) +32.9%
• Grupo Financiero Galicia S.A. (NasdaqSC:GGAL) +22.5%
• Gafisa S.A.(NYSE:GFA) +19.1%
• Banco Macro SA (NYSE:BMA) +16.3%
• NII Holdings Inc.(NasdaqGS: NIHD) +14.7%
• Data date: 10/14/11