An exchange-traded fund that tracks Argentine stocks saw its biggest outflow in more than two years ahead of this weekend’s presidential vote.
(Bloomberg) — An exchange-traded fund that tracks Argentine stocks saw its biggest outflow in more than two years ahead of this weekend’s presidential vote.
Traders pulled $6.6 million from the Global X MSCI Argentina ETF in one day last week, the most since April of 2021. The $55 million ETF is one of the main securities for investors interested in putting money on Argentina, where access to local markets is complicated by capital controls.
The move shows investor jitters before Sunday’s vote that pits libertarian front-runner Javier Milei against rivals including pro-business Patricia Bullrich and Economy Minister Sergio Massa.
The country’s next leader will be tasked with calming triple-digit inflation and bringing reserves back to a central bank devoid of dollars. Whether that’s Milei, Bullrich or Massa, the next administration will also need to slash the fiscal deficit and remove a cobweb of capital controls to restore investor confidence in the debt-ridden nation. It all spells economic turbulence.
Read More: Argentina’s Economy Is Abnormal and These Five Charts Show How
“It makes sense that some investors have taken profits” between the election, the Israel-Hamas conflict, the war in Ukraine and uncertainty around the Federal Reserve’s next steps, said Malcolm Dorson, head of emerging-market strategy at Global X.
The Argentine ETF, which trades under the ticker ARGT, is up more than 40% in the past 12 months in dollar terms.
Despite the recent weakness, many investors are watching the situation closely “as the election is pointing towards political and economic change,” said Dorson. “Any selloff might be seen as an attractive entry opportunity.”
–With assistance from Vildana Hajric and Carolina Wilson.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.