JPMorgan confirmed the news and said that this could mean the entry of almost US$1 billion in investments to Argentine companies.
A possible reclassification of Argentina to the category of emerging market by the provider of MSCI indices could trigger the entry of nearly $1 billion from investors into the country’s stocks, he said on Tuesday JPMorganThe news was shared by the president Javier Milei, who shared the news and stated: “normalizing the country.”
MSCI classifies Argentina as independent market rather than as part of its emerging market index suite. The index provider demoted Argentina in November 2021 due to market accessibility issues, including the exchange rate cap which limits investors’ ability to replicate the index.
Which companies could benefit the most from the inflow of capital?
If Argentina were to become part of the MSCI EM indices again, JPMorgan predicted that four companies would be part of the MSCI Argentina Standard Index: YPF, Galicia Financial Group, Macro Bank and Pampa Energia, while the MSCI Argentina Small Cap index would have eleven members.
“With an estimated weight of 0.2% in emerging markets, Argentina would be positioned between Colombia and Peru in the EM index,” said Diego Celedón of JPMorgan.
If the reclassification materializes, JPMorgan estimates that potential inflows could reach almost $1 billionincluding $786 million from the Standard Index and $176 million from the Small Cap Index.
MSCI typically announces any changes to its country classification during its Market Classification Review, which is typically scheduled for June and typically follows an investor consultation process.
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What is the MSCI
The MSCI index, which stands for Morgan Stanley Capital International, is a set of stock market indices used to measure the financial performance of stock markets around the world. These indices are created and managed by the MSCI company, which is a key reference in the financial and investment field.
The MSCI World is by far Morgan Stanley’s most important index.
Created in February 1970, its objective was to provide information about the direction of the economy and financial markets at a global level. However, it only includes developed countries, excluding emerging and pre-emerging countries.
Source: Ambito
