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MSCI Upgrades Argentina to Emerging Market Status

Jun 29, 2018

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On Thursday, June 21st, MSCI announced the MSCI Argentina Index will be reclassified to Emerging Market status from Frontier Market status.1 This change is set to take effect in May 2019, with Argentina expected to represent approximately 0.4% in the MSCI Emerging Markets Index. While Argentina’s most recent economic woes demonstrate its prospective challenges, international consensus remains sufficiently confident in Argentina’s long-term commitments to boosting market access and facilitating international investment.

MSCI’s announcement, made on the heels of a $50 billion International Monetary Fund (IMF) credit line approval,2 attests to the progress Argentina has made since its 2009 downgrade to Frontier Market. This centers around positive international reception of President Macri-led reforms – including the removal of capital controls and settling with foreign creditors– which are foundational steps in opening the Argentine economy.

In the announcement, MSCI cited international institutional investors’ confidence in Argentina’s ability to maintain market access as a primary justification for the upgrade. MSCI also clarified that the index would only include foreign listings of Argentinian companies, such as American Depositary Receipts (ADRs), notably excluding domestic listings on the Buenos Aires Stock Exchange due to better liquidity abroad.

Although Argentina will need to manage its balance of payments, real exchange rates, and inflation, IMF approval and MSCI reclassification present dual votes of confidence from the international monetary and investment communities. These judgments are suggestive of Argentine potential and affirm international investors’ interest in Argentina.

Related ETFs

ARGT: The Global X MSCI Argentina ETF invests in among the largest and most liquid securities with exposure to Argentina.

Category: Articles

Topics: Emerging Markets, International Opportunities

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Shares of ETFs are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. 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, not the MSCI Argentina Index. One cannot invest directly in an index.

Carefully consider the fund’s investment objectives, risks, and charges and expenses before investing. This and other information can be found in the Fund’s summary or full prospectuses, which may be obtained at globalxfunds.com. Please read the prospectus carefully before investing.

Global X Management Company LLC serves as an advisor to Global X Funds. The Funds are distributed by SEI Investments Distribution Co. (SIDCO), which is not affiliated with Global X Management Company LLC. Global X Funds are not sponsored, endorsed, issued, sold or promoted by MSCI nor does MSCI make any representations regarding the advisability of investing in the Global X Funds. Neither SIDCO nor Global X is affiliated with MSCI.

Investing involves risk, including the possible loss of principal. International investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles, or from economic or political instability in other nations. Emerging markets involve heightened risks related to the same factors as well as increased volatility and lower trading volume. Securities focusing on a single country may be subject to higher volatility. ARGT is non-diversified,