LatinFinance - May/June 2017 - 28

ASSET
MANAGERS
EDUARDO
COSTANTINI

He invested in real estate and equities before it was fashionable. Now, one
of the wealthiest businessmen in Argentina sees a bright future for the
economy. By Kevin Gray

Bright view

hrough years of dictatorship and
economic crises, Eduardo Costantini has
made several fortunes by nimbly navigating
Argentina's boom-bust cycles. One of the
country's wealthiest businessmen, Costantini says he has upwards of a half-billion
dollars he'd like to invest to develop new
projects.
As investors refocus their attention on
South America's second-largest economy,
the head of the property development and
wealth management firm Consultatio sees
plays in Buenos Aires real estate, undervalued Argentine securities and even the peso.
And once he identifies the right opportunity, Costantini says he's ready to pull the
trigger. "People want to see whether there
will be a reaffirmation of the government
and its policies," he says. "But I am seeing
some encouraging signs in the economy."
Costantini, 70, enjoys a long view on
Argentina. After earning a master's degree
in economics from the University of East
Anglia in Great Britain in 1971, he used several successful stock market trades to buy
some land that he later sold, quadrupling
his investment. Several years later he set
up Consultatio Asset Management, earning
millions by trading the shares of Argentine
bank Banco Francés.
By the early 1990s, he turned his growing
fortune to real estate, developing several
marquee Buenos Aires office buildings, including Catalina towers. The company went
on to build Nordelta, one of Argentina's
most exclusive gated communities.
Meanwhile, as Argentina's benchmark
stock index has climbed to record highs,
the share price of Consultatio, the country's

28 L ATINFINA NCE.COM - May/June 2017

largest publicly traded real estate company, has more than doubled since late 2015.
But while investor enthusiasm over a
shift to more business-friendly policies under President Mauricio Macri has triggered
healthy stock and bond market gains, the
broader economy has only showed tepid
signs of recovery. Hoping to jump-start
the economy, Macri has worked hard to
persuade local and foreign businesses that
Argentina has entered a new era both politically and economically. Yet government
hopes of a new wave of foreign investment
have amounted to only a trickle so far. In
that malaise, Costantini has identified additional signs of opportunity.
"Overall, I think Argentina's outlook is
very positive," he says. "While investment
has been lower, sectors of the economy
like energy are drawing strong investor
interest." Other economic bright spots
include rising sales of asphalt and cement,
and construction activity has picked up.
The political component
Costantini says some Argentine executives
appear to be waiting for stronger evidence
that an economic recovery is taking hold
before implementing their long-overdue
investment plans. Argentina's macroeconomic situation remains complex.
Inflation, which has started to fall after
reaching 47% last year, remains in double
digits. Interest rates still hover above 20%.
"Some companies are looking for an
improved macroeconomic convergence,"
he says. Others, Costantini adds, are waiting for the outcome of legislative elections
later this year. The vote, scheduled for

October, will be a political test for Macri,
whose party does not hold a congressional
majority and needs legislative muscle to
move forward with his reform agenda.
Macri received some welcome news in
March when economic data showed Argentina's economy grew by 0.5% in the last
quarter of 2016, with quarter-on-quarter
growth of 0.1%, marking the end of recession. The IMF forecasts Argentina's economy will expand 2.7% this year.
Specifically, Costantini acknowledges
positive signs in the high-end real estate
market that he knows well. He adds that
more projects could appear if Argentina's
credit markets develop. Consultatio has
"an excess" liquidity of some $500 million
and is looking to develop new projects, he
says. "We're waiting for the potential sale
of some strategic and interesting plots of
land."
He is also bullish on Argentine stocks
and bonds. "Argentine debt in my opinion
is still undervalued compared to other
Latin American countries," he says. "And
I think there is room for a continued rally
in equities, particularly bank and energy
stocks. In the short term, stocks will continue to perform well, but how long will
depend on the economy's performance
and the electoral result in October."
Costantini also likes some peso currency investment options. "Local interest
rates are attractive, so alternatives like
short-term securities issued by the central
bank, known as Lebacs, are appealing. So
far, this year the peso has gained against
the dollar, so the returns in pesos are very
interesting." LF

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