The Emergence of Argentinian Equities

May 09, 2024 | Eddie Arrieta, Associate Research Analyst

Argentina has faced myriad economic headwinds in recent time, including hyperinflation, currency-related difficulties, and a series of defaults on its sovereign debt. As the country headed into a presidential election year in 2023, Javier Milei, a member of the Argentinian Libertarian Party, emerged as a front-runner in the race, as many viewed his laissez-faire approach to economic policy as having the potential to correct the nation’s trajectory. Milei ultimately won the presidential election and assumed office in December of last year.

Over the last several months, President Milei has enacted a series of unique and controversial economic policies aimed at making the nation’s currency more competitive, reigning in excessive inflation, and stabilizing Argentina’s economic footing. These policies include the devaluation of the Argentinian peso by more than 50% and the introduction of a crawling peg, which is designed to further depreciate the peso. Additional initiatives by the Milei government include lifting capital controls, slashing state subsidies, and scrapping hundreds of government jobs and regulations. This austerity program, while certainly creating its own set of complications for the Argentinian people, has been largely well received by investors. To that point, the MSCI Argentina Index has returned close to 200% on a cumulative basis over the last two years, which is far in excess of the cumulative returns of both the MSCI Emerging Markets and MSCI Frontier Emerging Markets indices in that time. This performance is a sign of investor optimism related to the country’s economic prospects under Milei’s leadership, and Argentina’s status as a world leader in lithium and copper reserves could provide additional support from market participants. Marquette will continue to monitor the progress made by Argentina on the economic front.

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