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MSCI Upgrades Pakistan, to Review Argentina

Jun 16, 2016

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On Tuesday June 14th, MSCI announced the MSCI Pakistan Index will be reclassified to Emerging Markets status from Frontier Market status. MSCI also announced that it is adding the MSCI Argentina Index to the review list for a potential reclassification to Emerging Markets status as part of the 2017 Annual Market Classification Review.  Both indexes had previously been downgraded to Frontier Market status during the financial crisis over seven years ago, but have since taken meaningful steps to strengthen their economies and financial markets.

Pakistan

Although Pakistan was hurt by the financial crisis and has been mired by geopolitical issues, its long term growth has remained robust, averaging 4.2% annual GDP growth over the past 15 years. Looking forward, the country is well positioned to maintain its strong growth trajectory with favorable demographics- 54% of Pakistan’s population is under the age of 25- and significant infrastructure investment, having agreed to a $46 billion deal with China to develop a new economic corridor1. MSCI’s upgrade of Pakistan to an Emerging Market is evidence the international investment community has taken notice of Pakistan and represents a major milestone in the nation’s growth trajectory. The Global X MSCI Pakistan ETF (PAK) is the only US-listed ETF with dedicated exposure to Pakistani stocks2.

Argentina

Since Argentina’s President Mauricio Macri’s election in late-2015, South America’s second largest economy has undergone substantial reforms in an effort to return to sustainable growth. Macri has quickly sought to tackle issues such as high inflation, unsustainable fiscal policies, and isolation from global capital markets. He has done so by abolishing protective tariffs and quotas, removing capital controls to allow the currency to float freely, and worked with international creditors to settle outstanding debts. The Global X MSCI Argentina ETF (ARGT) is the only US-listed ETF to provide targeted exposure to Argentinian equities3. ARGT has seen nearly $50 million in net inflows4 over the past year as sentiment and investment interest in Argentina continues to rise.

Category: Articles

Topics: Emerging Markets, International Opportunities

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There are risks involved with investing, including possible loss of principal. In addition to the normal risks associate with investing, international investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted account principles or from social, economic or political instability. Emerging markets involve heightened risks related to the same factors as well as increased volatility and lower trading volume. Certain economies in the Middle East depend to a significant degree upon exports of primary commodities such as oil. A sustained decrease in commodity prices could have a significant negative impact on all aspects of the economy in the region. Middle Eastern governments have exercised and continue to exercise substantial influence over many aspects of the private sector. Pakistan is also subject to natural disaster risk. In addition, recent political instability and protests in the Middle East have caused significant disruptions to many industries. Continued political and social unrest in these areas may negatively affect the value of your investment in the Fund. Pakistan has recently seen elevated levels of ethnic and religious conflict, in some cases resulting in violence or acts of terrorism. Escalation of these conflicts would have an adverse effect on Pakistan’s economy. The fund is non-diversified.

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