Markets

A Hot ETF in a Hot Region

After several years of dismal performances, Latin America exchange traded funds are roaring back in 2016 and have actually been leaders of the emerging markets resurgence. Up more than 25% this year, the Global X MSCI Argentina ETF (NYSEArca: ARGT ) is one of the stars among Latin America ETFs and that is saying something.

That is a positive and significant departure from the past couple of years of Argentine equity performance. In the 14 years after Argentina carried out the world's largest default, the Nestor Kirchner and Cristina Kirchner implemented a number of outdated policies, including a heavily regulated foreign-exchange system, seizure of privately-owned assets and under-reported inflation.

Related: How Central Banks Affect LatAm ETFs

In local currency terms, Argentina's benchmark Merval Index is one of the world's best-performing equity markets in 2016.

Market observers seem inclined to wager that Argentina's newly elected Mauricio Macri could mean big changes in the economy after years of tepid growth. The pro-market Macri has pledged to quickly reverse much of the previous heavy-handed economic policies and open up the economy that has been posting back-to-back years of near stagnate growth, Bloomberg reports.

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"With Argentina's credit rating raised to B- by S&P Global Ratings in May, prompted by a payment of $2.7 billion past-due interest, it appears that the woes of its credit history are mainly in the past," according to Investopedia .

Argentina's foreign reserves are at nine-year lows. Prices on the country's commodity exports are down. The budget deficit is at its widest in three decades. Inflation is running at an annual pace of over 20%. Still, this is South America's third-largest economy and home to abundant natural resources, levering the country to the rebounding commodities trade.

Related: Brazil ETFs Roar Back as Government Incompetence Ends

Oxford Economics projects gross domestic product could contract over the next two years before returning to growth of more than 5% by 2019.

ARGT "is trading within a defined uptrend and many traders will likely maintain their bullish outlook until the price closes below the support of the 200d-day moving average, which is trading near $20," adds Investopedia.

Global X MSCI Argentina ETF

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article was provided by our partner Tom Lydon of etftrends.com.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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