A very important long-term trend is that the Argentine market is getting more diversified and includes more companies as well as industries to invest in, the T. Rowe Price manager said. Financials, oil and gas, utilities, infrastructure and even some tech companies are coming to the market. Its best-known, homegrown company is the e-commerce company MercadoLibre, which is incorporated in the United States.
For the time being, though, Argentina is considered a “frontier” market, less advanced even than emerging markets like Brazil or China, and it’s not included in the index that Wachnitz’s fund uses as a benchmark. While the opportunity set is expanding, the country has yet to prove that its economy has become more stable, and hence it remains a risky market to invest in, she said.
That’s why she thinks another positive would come if the nation is added to Morgan Stanley’s emerging-market indices, expanding the range of investors looking at the country’s equity market. Argentina has room to grow because its corporate debt levels are lower than in other Latin nations and companies can borrow more now that lenders don’t consider Argentina as risky, and a better economic outlook is driving demand for credit, she said.
There are only a few exchange-traded funds that specialize in Argentina, and they are fairly small. The purest Argentina play is the The Global X MSCI Argentina ETF (ARGT), which holds only $219 million in assets under management. Its largest holdings are MercadoLibre, which has nearly doubled in the last year; oil-drilling supplier Tenaris; and the bank Grupo Financiero Galicia.
— By Tim Mullaney, special to CNBC.com
