Argentina ETF Sees Inflows as Election Optimism Lures Investorsby
Biggest stock ETF sees first inflows since April, data show
Merval index trading shows bullish `golden cross' pattern
Investors are putting money into Argentina’s largest exchange-traded stock fund on speculation that a new government taking over this year will push through policies that bolster growth and damp inflation.
The Global X MSCI Argentina ETF recorded inflows of $970,000 on Wednesday, the first for the fund since April, according to data compiled by Bloomberg. The fund, which has a market value of about $16 million and mostly invests in American depositary receipts of Argentine companies, has climbed 3.7 percent this year.
Investors are taking a new look at Argentina’s stocks as optimism mounts that the next president will take on the economic challenges left by President Cristina Fernandez de Kirchner’s government, according to Christian Reos, the head of research at Buenos Aires-based brokerage Allaria Ledesma & Cia. Opposition candidate Mauricio Macri and ruling-party candidate Daniel Scioli, who face off in a Nov. 22 runoff election, have both pledged to seek changes that would bolster growth and curb inflation estimated at 30 percent.
"After years of not having Argentina on the radar, some investors are betting on stocks even before seeing the final results of the election," Reos said. "These are bets on a change in economic policy."
In another sign of optimism, trading in Argentina’s benchmark stock index showed the 50-day moving average of prices crossed above the 200-day average this week. Known as a golden cross, that would signal to traders studying technical levels that prices may climb higher. The Merval reached a record high on Tuesday and is up 49 percent this year in local currency terms.