In our global macro note The Closer last night, we discussed the brutal start to the week for Argentina. As far as the global macro picture goes, it’s hard to find a bigger one-day trainwreck than Argentina. A higher-than-expected vote share for populists in the country’s presidential primary kicked off a staggering 37% decline in Argentine stocks priced in the domestic peso, the second-worst day since the 1980s. Priced in USD, it was also the second-worst day, though the January 2002 devaluation was a more significant loss (barely). Either way, investors have effectively gotten cut in half between the local currency declines in stock prices and the ~15% drop in the peso. For US-based investors, the drop in ARGT (the Global X Funds MSCI Argentina ETF) was 24%. For international investors, the dream is now that huge blows to financial markets from Peronist success will mean the populist Judicialist Party won’t unseat reform-oriented President Macri in the October general election. If Macri wins, Argentinian assets should return to where they traded last week or higher. Of course, voters aren’t beholden to financial markets, so if they decide that the costs to the currency, equity market, and funding of the Argentine economy are worth it to shift leftwards, then anybody reaching in to catch falling knives today will get cut. Start a two-week free trial to Bespoke Institutional to access The Closer and the rest of Bespoke’s suite of Institutional products.

It’s worth noting that the ARGT ETF is 22.3% weighted to MercadoLibre (MELI): Alibaba for Latin America. Tenaris, a steel manufacturer, is a 10% weight, while Globant (GLOB) and banks round out the names comprising more than half of ARGT’s market cap exposure.  Check out the disastrous drop for ARGT yesterday in the chart below:

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