Despite recession, Argentine stock ETF outperforms Wall Street in 2024 and leads global ranking

The story of Argentine variable income is marked by volatility and constant challenges. At the beginning of 2018, the S&P Merval touched its highest level in dollars, but then collapsed and fell by 49% over the course of that year. It then fell by 28.4% in 2019 and 34.7% in 2020 due to the pandemic. However, the market’s expectation of an economic recovery, not without a high degree of risk, which translates into juicy returns for investors who bet on national equity, places the Argentina ETF (exchange traded fund) -ARGT or iShares MSCI Argentina and Global Exposure ETF Fund- as the highest performing in the world so far in 2024, with 22.3%.

And despite the challenges inherent to the Argentine economy, adequate timing and strategic patience can offer opportunities in the country’s assets. For many, it may come as a surprise that with a chronic economic crisis and one of the highest inflation rates in the world clouding the outlook, the Argentine stock ETF stands out as the highest gainer compared to those of other global markets, such as the one from Wall Street (+19%), India (+16.9%) or Mexico (-17.6%).

It happens that the stock market does not always faithfully reflect general economic conditions. Therefore, despite these contrasts, the continued demand for Argentine stocks by investors suggests that there are underlying factors drawing attention to Argentine assets. And so, the country is breaking away from the negative trend of the region’s larger economies. For example, Mexico and Brazilwhich make up the main markets in Latin America and have their ETFs in decline.

The market’s vote of confidence in the Government

As the independent financial advisor explains, Martina Del Giudice“In a year where global markets have faced challenges, even when compared to our great neighbor Brazil, Argentina has stood out in the financial market with very good returns” so far in 2024.

And that’s where market analysis comes into play. From the Giudice He argues that although Argentina has had serious economic problems in the past, in 2024 there have been a series of Structural and political reforms that have generated some confidence among investors. These measures include a careful strategy and a more prudent management of fiscal and monetary policy, which has helped to stabilize inflation and realign the bases. Something that is reflected positively with fiscal and trade surpluslaying a solid foundation. However, this does not guarantee future success and there are some doubts about the economic plan for the coming months.

In this context, the strategist points out that Investors who have chosen Argentina have seen significant returns on their investments. This is especially notable when compared to other markets.“like Wall Street, which has had more moderate growth.” He adds that it is important to highlight that, “Although returns have been high, investing in emerging markets, such as Argentina, also involves risks.“. However, for those willing to take them on, the rewards, so far, are substantial.

The performance of Argentina’s ETF

In dialogue with this medium, the financial analyst Leandro Monnittola explains that the ARGT ETF It is composed of actions of companies of Argentine origin, among which are: Mercado Libre (MELI), Galicia Financial Group (GGAL), YPF (YPF), Banco Macro (BMA), Pampa (PAM) and Southern Gas Transport (TGS), among others. And although the “ARGT” provides a segmented vision by its formation, its main figure is MELI. “This gives us a true picture of the demand for these assets and their performance confirms this,” he says.

For the analyst, the risk associated with investing in Argentina is high, But so are the potential returns offered by a possible stabilization and strengthening of the economic structure.“In a recovery scenario, returns could be significantly higher,” he warns.

He explains that, first, it is important to highlight that many assets reached their highs in the first quarter of 2018. Since then, there is a considerable journey to reach those levels, “suggesting that there is significant performance potential“Monnitola says. However, because these assets are high risk, the bet is on higher returns, provided the associated risk is accepted.

For Monnittola, he country risk plays a key role in the rotation towards Argentine “equity”. And, in line with Del Guidice, he analyzes that since the new government took control, the trend is downwards. It was around 1,900 points at the beginning of the year and today it is positioned at over 1,500. And it calculates that if a consistent decline continues that allows the country to get closer to debt markets and an economic stabilization materializes that accelerates the exit from the cepo, “The flow towards Argentine variable income will be even greater“.

And it is that it emphasizes that although Some of the leading panel’s stocks are listed only on the local marketan increase in demand for Argentine ADRs “pulls” positively all other stocks, including part of the general panel“Today we find ourselves in a scenario of high volatility in the variable income and in the domestic sphere it could be the cause. The pension reform is a test for the Government and a political test that marks the prices,” he concludes, offering an overview of what is happening today with the S&P Merval.

Thus, while the S&P Merval and other global indices face moments of calm or decline, The Argentine market stands as a beacon of potential gains. At least that is what its ETF has shown in the first part of the year. And while volatility may be high, for the brave who navigate its turbulent waters, returns promise to be substantial. The lesson here is clear: In the midst of adversity, strategic vision and patience can turn uncertainty into a golden opportunity..