A Single-Country ETF to Play Argentina's Rebound | ETF Trends

Single-country opportunities can give exchange-traded fund (ETF) investors necessary portfolio diversification with funds like the Global X MSCI Argentina ETF (ARGT).

Argentina already experienced a profound economic improvement in the second half of the year. Like many emerging market countries, things looked bleak for Argentina with a rise in COVID-19 cases, but the effects appear to be waning.

“Argentina’s economy jumped 17.9% year on year in the second quarter, ahead of a median forecast, rebounding strongly after a sharp contraction in the same period of 2020 when the economy was hammered by the COVID-19 pandemic,” a Reuters article said. “The year-on-year rise was the highest in recent records for the country, a major exporter of grains and meat, and came in above a median analyst forecast of 17.3%. The economy, however, dipped 1.4% against the previous quarter.”

ARGT seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI All Argentina 25/50 Index. The underlying index is designed to represent the performance of the broad Argentina equity universe while including a minimum number of constituents.

Up 14% on the year, ARGT dipped below its 50-day moving average in July before a precipitous run higher. Stretch the performance chart out to one year, and its gains are at 50%.ARGT Chart

Strong Growth Prospects Ahead

ETF investors looking at ARGT could expect strong growth for the rest of the year if analysts’ estimates hold up. One of the key challenges Argentina will still have to face from economic fundamentals standpoint is its high inflation.

Rampant inflation has been a thorn in the side for Latin America’s third largest country. That will be a key metric to watch for any prospective investors looking at opportunities in Argentina.

“Argentina’s economy will grow 7.2% in 2021, analysts said in an Argentine central bank poll published on Friday, an improvement on their forecast last month of 6.8% growth,” another Reuters article said. “Inflation in 2021 is seen at 48.4%, 0.2 points percentage above last month’s estimate, according to 42 respondents to the Market Expectations Survey (REM) by the Argentine central bank on Aug. 27-31.”

“Latin America’s third-largest economy has suffered from high inflation for several years and has been in recession for three years,” the article added. “These economic woes deepened since the 2020 COVID-19 pandemic.”ARGT ChartFor more news, information, and strategy, visit the Thematic Investing Channel.