Fears of former president Cristina Fernandez de Kirchner returning to power resulted in the MERVAL index, Argentina’s largest stock index, falling 37.9% on Monday as the market opened after the weekend. The index has since recovered 13.3% since this point but remains nearly 30% below its close on Friday of 44,350.
ETFs with exposure to Argentina have subsequentially suffered significant losses. AGT saw its Net Asset Value (NAV) fall 24.1% on Monday and a further 1% over the remainder of the week. MercadoLibre, AGT’s largest holding with 27% of the fund, saw its share price fall 11.1%. With that being said, according to the fund’s product page, Argentina only accounts for 47% of AGT’s geography exposure.
The Global X MSCI Argentina ETF (ARGT), which is comprised solely of Argentinian stocks, as well as a handful of currencies, saw its NAV fall 24.4% on Monday, only slightly more than AGT.
Argentina plays a significant role for frontier ETFs, with the country accounting for 15% of the Xtrackers S&P Select Frontier Swap UCITS ETF (XSFD). As a result of this large exposure, XSFD also saw its NAV drop 6.8% on Monday and a further 1.6% for the rest of the week.
AGT, ARGT and XSFD's YTD performance - Source: Bloomberg
From the graph above it is obvious the event on Monday has caused AGT (Black), ARGT (Yellow) and XSFD (Blue) to see a large portion of their year-to-date gains to be lost. AGT and ARGT, in particular, saw their NAV climb over 40% between New Years and 8 August. Following the election, both are still positive for the year but significantly lower with AGT up 6.8% and ARGT up 7.5%.
In May, MSCI upgraded Argentina to emerging market status, resulting in stocks domiciled in the country being included in the corresponding indices. The performance of a number of emerging market ETFs has not been great as a result of the ongoing trade war between China and the US.