Shares Of Argentinean Pension Funds Plummet 11 Percent On News Of Nationalization

October 22, 2008 12:01 p.m. EST

Buenos Aires, Argentina (AHN) - After Argentinean President Cristina Fernandez de Kircher signed a bill Wednesday nationalizing the country's 10 pension funds, shares of the funds plummeted by 11 percent.

Fernandez said the move for state control over $30 billion (96.5 billion peso) investments on pensions seeks to protect the money from the global market turbulence.

Critics hit the Argentinean government for seeking to control the funds which they fear would be tapped by the state as the South American nation faces a tough budget year.

Bill Rudman, manager of WestLB Mellon Asset Management in London, commented to Bloomberg, "It's the final of many nails in the coffin from an institutional investor perspective." Rudman forecast Argentina will "disappear into irrelevance."

The funds will be handled by the National Social Security Administration, according to the office's head Amado Boudou. The 10 funds include units of HSBC Holdings and Banco Bilbao Vizcaya Argentaria.

Union leaders backed the government's move. The bill will need Congressional approval although it will likely be approved since Fernandez's Front for Victory party is the majority.