Defining moment for investors looms as MSCI rules on China Index provider set to make call on including mainland A-shares in its EM benchmark
In other key decisions from MSCI next week, Argentina may move from being a big fish in the frontier index to a small sprat in the emerging market ocean. It has 14 stocks in MSCI’s FM100 index, more than any other country, and an index weight of 19.5 per cent, second only to Kuwait. Nine of those stocks would make it into the EM index, leaving Argentina with a weight of just 0.4 per cent.
That would come when there is a lot more money available for investing in Argentina. Analysts at Goldman Sachs wrote in a report this week that “the aggregate pocket of investors eligible to trade Argentine equities” could increase by about five times. All else being equal, they estimate that promotion to EM status would boost Argentine share prices by between 8 and 15 per cent.