Only ... no. It is true that low oil prices are terrible for YPF, but YPF makes up a small chunk of the Argentine stock market. (The BCBA had a market capitalization around 3.9 trillion pesos on December 18. YPF had a market cap around 108 billion pesos.) So it is not the direct effect.
Low oil prices should be good for Argentina. The country is a net oil importer. It is also a net gas importer ... and the price of its pipeline gas imports from Bolivia are linked to the price of oil. In total, net imports could drop by $2.7 billion next year. Now, that ain’t huge in a $609 billion economy, but at 0.4% of GDP it’s not nothing.
The thing is, low prices will mess with YPF’s plans to make Argentina into the second major producer of tight oil after the United States. But investment plans were greater than $2.7 billion for 2015. A fall in investment spending could cancel out the benefit from lower hydrocarbon imports.
That still is not enough to explain the selloff. So what is it? Well, the recent decline in oil prices has all the hallmarks of a demand shock, albeit one enabled by the recent rise in North American oil production and the return of Libya to world markets. (See the chart below, from the IEA.) The economic slowdown in Europe and China that is cutting demand for oil will also cut the demand for other Argentine products. And that does not augur well for the Argentine economy.
In short, the same factors driving international oil prices down are hitting Argentina hard. But the effect is not causal.
I had plans to travel extensively in Argentina in 2015, investigating YPF. It now looks like it will not happen. Life intervenes: new job, opportunities in Albania and the Philippines, and I happen to prefer spending time with my children. (I feel for my co-blogger, who continues to travel!) And it is particularly disappointing since Argentina just may be my favorite country on the planet, both in terms of the culture and in terms of its intellectual fascination.
Ah, ni modo. There’s still Mexico!