Argentina Update
After tumbling in 2018 and in 2019, Argentine equities have quietly stabilized and posted positive double-digit returns over the past three years. Argentina’s market has begun this year on the right foot as well, with the MSCI Argentina index rising 15.43% year-to-date as of January 31, 2023. Key drivers of the recent rally include proximity to this year’s election, US dollar weakness, and China’s reopening. We believe politics and macroeconomics will drive near term performance. With growing pressure on solvency accompanied with a potential change in governance, 2023 could send Argentina in one of two directions.
The views and information discussed are subject to change and may not reflect the current views of the writer(s). The views expressed represent an assessment of market conditions at a specific point in time, are opinions and may not be relied upon as investment advice regarding a particular investment or markets in general. Such information does not constitute a recommendation to buy or sell securities or investment vehicles
Definitions
Book value is a company's equity value as reported in its financial statements. Fiscal Deficit is a shortfall in a government’s income compared with its spending. MSCI Argentina Index is designed to measure the performance of the large and mid cap segments of the Argentine market. MSCI Emerging Markets (EM) Index captures large and mid cap representation across 24 Emerging Market countries. Price/earnings (P/E) ratio is the ratio for valuing a company that measures its current share price relative to its per-share earnings. S&P 500 Index is a market-capitalization-weighted index of 500 leading publicly traded companies in the U.S.
Investment Considerations — There can be no guarantee that any strategy (risk management or otherwise) will be successful. All investing involves risk, including the potential of loss of principal.
Emerging Markets Risk — The risks of foreign investments are typically greater in less developed countries, which are sometimes referred to as emerging markets. For example, political, legal and economic structures in these country may be changing rapidly, which can cause instability and greater risk of loss. These countries are also more likely to experience higher levels of inflation, deflation or currency devaluation, which could hurt their economies and securities markets. For these and other reasons, investments in emerging markets are often considered speculative. Similarly, investors are also subject to foreign securities risks including, but not limited to, the fact that foreign investments may be subject to different and in some circumstances less stringent regulatory and disclosure standards than U.S. investments.