Latin America equities and exchange traded funds are bouncing back in a big way this year with the Global X MSCI Argentina ETF (NYSEArca: ARGT) shining as one of the best of the lot with a year-to-date gain of about 24%.
In fact, Argentina’s benchmark Merval Index is the best-performing equity bourse in the world this year. That is a significant reversal fortune from the past couple of years of Argentine equity performance. In the 14 years after Argentina carried out the world’s largest default, the Nestor Kirchner and Cristina Kirchner implemented a number of outdated policies, including a heavily regulated foreign-exchange system, seizure of privately-owned assets and under-reported inflation.
Related: How Central Banks Affect LatAm ETFs
Argentina’s Merval Index “was revived after Argentine President Mauricio Macri took office in December. The International Monetary Fund expects the country’s economy to contract around 1% this year before growing 2.8% in 2017, reports William Watts for MarketWatch.
Analysts are warning that things could initially grow worse as the new president implements tough measures, such as cuts to the budget and devaluation of the peso, that could further weigh on consumers. Marci has stated that settling old debts will be a top priority after he is sworn in.
[related_stories]Oxford Economics projects gross domestic product could contract over the next two years before returning to growth of more than 5% by 2019.
After several years of dismal performances, Latin America exchange traded funds are roaring back in 2016 and have actually been leaders of the emerging markets resurgence. Rebounding commodities prices and the weaker dollar are key reasons why Latin America ETFs are rebounding.
Related: Investors Look to Dividend-Paying Stock ETFs as Interest Rates Stay Low
“Macri has eliminated most capital controls and moved to reach a deal with creditors, helping to dispel a cloud that has lingered over the country since its 2001 default. Index-provider MSCI in June said it would begin a 12-month review to decide whether to promote Argentina to emerging-market status from its frontier-market index,” adds MarketWatch.
For more information on the developing economies, visit our emerging markets category.
Global X MSCI Argentina ETF
