Argentina ETF Outperforms Global Market, While Brazil Lags Behind

The Global X MSCI Argentina ETF (ARGT) has emerged as the world’s top-performing ETF in 2024. This fund tracks Argentine company receipts traded in New York.

Meanwhile, the ETF following Brazilian company receipts ranks second-to-last in performance during the same period.

ARGT, comprising receipts from 24 Argentine companies, delivered returns of nearly 27% between January and September 11, 2024.

In contrast, the iShares MSCI Brazil ETF (EWZ), linked to 58 B3 companies, suffered losses of 16.40% in the same timeframe.

Thiago Kurth Guedes, business development director at Bridgewise, attributes ARGT’s success to President Javier Milei’s controversial austerity policies. These measures helped Argentina achieve its first half-year financial surplus since 2008.

Milei’s economic package aimed to control inflation exceeding 200%. It included peso devaluation, price control removal, and government spending cuts. International organizations like the IMF initially praised these efforts.

However, Guedes cautions that ARGT’s current performance level may not be sustainable. The ETF has reached a stability point with limited upside potential. He advises current investors to hold but suggests it’s not an ideal entry point for new investments.

Brazil’s EWZ recorded the second-worst performance of the year, falling 16.04% by mid-September. Only Mexico’s fund fared worse, shrinking by 23.72%. Experts attribute Brazil’s poor performance to concerns over fiscal policies and government spending.

Argentina ETF Outperforms Global Market, While Brazil Lags Behind

Several prominent asset managers, including Verde Asset Management and Kapitalo Investments, have reduced or eliminated their exposure to the Brazilian stock market. They cite expectations of interest rate hikes as a key factor.

Despite these concerns, the overall outlook for Brazil’s Ibovespa index remains positive for the rest of the year. The Market Barometer survey projects the Ibovespa reaching 145,000 points by the end of 2024.

Emerging markets offer investment opportunities due to growth potential and improving macroeconomic stability.

However, they also carry risks such as currency volatility and political uncertainty. Ray Dalio predicts Brazil will grow by only 1.7% annually in the next decade, the slowest among major emerging economies.

More: Argentina news in English, every day from The Rio Times.

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