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Argentina’s Stock Market Is Soaring: Will It Continue?

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Market performance in Argentina

Argentina is Latin America’s (ILF) third-largest economy and has been struggling with economic woes for the past decade. Most of Argentina’s downfall in the last decade was due to mismanagement of the country’s affairs by the former leftist populist President Cristina Fernández de Kirchner.

In the last decade, Argentina experienced ludicrous policies, economic mismanagement, and serious corruption charges. With the new government under the leadership of President Mauricio Macri, the country seems to be doing much better.

Let’s look now at the stock market performance in Argentina over the last year.

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Rally in Argentina’s stock market

Argentina’s stock market (ARGT) has generally underperformed the emerging market indexes (EEM) over the past decade. However, with the new government, there has been a remarkable improvement in performance in the past year. Argentina’s Merval Index rose about 44.0% in 2016 and has risen nearly 24.0% in 1Q17.

Investors seem to like the economic reforms of President Macri, who is center-right. He has changed the course of the country from protectionism, debt defaults, and foreign-exchange controls and revamped its discredited economics statistics agency.

The Global X MSCI Argentina ETF (ARGT) has also performed remarkably well considering its past performance. ARGT rose about 28.0% in 2016, making an average market cap of about $8.0 billion as of 2016. Some of the top gainers in the ETF for 2016 include Globant (GLOB), Macro Bank (BMA), Grupo Financiero Galicia (GGAL), and Telecom Argentina (TEO).

Next, let’s look at Argentina’s inflation trend, which was under the microscope of misappropriation under the previous government.

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