US-listed Argentine stocks slump after MSCI disappointment

US-listed Argentine stocks slump after MSCI disappointment

Argentina’s stock market is not due to start trading for another hour. But Argentine companies listed in the US are already coming under intense selling pressure on Wednesday, in an early indication of the potential losses the country’s benchmark Merval stock index could face following MSCI’s decision last night to leave Argentina as a frontier market.

MercadoLibre, which is often described as Latin America’s answer to eBay, is down 2.1 percent in early trading. The online retailer, which boasts a market cap of $11.85bn, is one of Argentina’s most successful tech companies. Its rise was underscored last week when it replaced Yahoo in the Nasdaq-100 index.

Elsewhere, New York-listed American Depositary Receipts (ADRs) for Argentine lender Banco Macro are down 7.2 per cent while those for rival Grupo Financiero Galicia declined 7.5 per cent.

ADRs for Telecom Argentina dived nearly 11 per cent and YPF, the state-owned oil major, saw its ADRs shed 7.5 per cent of their value.

Analysts have warned that Argentine stocks could face an intense sell-off after MSCI confounded expectations yesterday by not upgrading the country to emerging market status.

An MSCI upgrade would have immediately created a far bigger pool of assets that could potentially invest in Argentina. As much as 100 times more money tracks emerging markets than frontier markets, which tend to be less highly valued owing to greater political instability, elevated currency risk and lower liquidity.

The country’s benchmark Merval stock market has risen more than 74 per cent since Mauricio Macri became president over 18 months ago following a host of market-friendly policies he has implemented with the aim of opening up Argentina’s economy.

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