Argentina: Too wild to ignore for most equity investors
Argentina equities, measured by MSCI Argentina, have bounced 15%, in total US$ return terms, since their early September 2019 lows. Trailing price/book is 1.0x and the index level (not to mention the FX rate of course) is, of course, still well below where it was prior to Macri's election in October 2015 (when capital controls were in place, debt was in default and official inflation data was unreliable under the Kirchner government).
Even though they can all agree on the depth of its macroeconomic challenges, this is the latest example of a sharp bounce that creates such a headache for equity fund managers using a benchmark where Argentina is a material weight.
Equity investors can walk away from Argentina until, at least, the new government's economic policy (fiscal austerity, FX convertibility), restructuring with bond holders (local and international) and relations with the IMFare more clearly visible...
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