Photographer: Ron Antonelli/Bloomberg

Goldman Sachs Trumps Rivals That Botched Argentina MSCI Call

Updated on
  • Citi named companies likely to join index hours before delay
  • Most banks, including JPMorgan, Credit Suisse, erred

Goldman Sachs Group Inc. lived up to its golden reputation last night by staying silent while peers predicted MSCI Inc. would upgrade Argentina.

Citigroup Inc. went so far as to name seven companies that could join the emerging market index, mere hours before MSCI declined to promote Argentina from a frontier market. Rivals JPMorgan Chase & Co. and Credit Suisse Group AG produced reports through last week that said Argentina’s emergent status was pretty much a foregone conclusion. The head analysts at UBS Securities LLC and Banco Santander Rio SA also made the call.

Goldman Sachs made none.

While the optimists used phrases such as "most likely" or "high chances," Goldman Sachs preferred to write a report with a big "if."

"Nobody saw this decision coming," said Geoffrey Dennis, the head of emerging market equity strategy at UBS. "MSCI had no intention of promoting Argentina and this is not a decision they took yesterday. They should have given the market a little warning that this was a possibility in order to avoid the shock. They have created a quite significant negative surprise in the market."

Juan Cerruti, a Banco Santander Rio spokesman declined to comment in an email. Representatives from Citigroup, JPMorgan and Credit Suisse didn’t immediately reply to calls and emails seeking comment. MSCI’s head of media relations Kristin Meza did not immediately reply to an email seeking comment.

In the end, MSCI said President Mauricio Macri’s changes to open one of the world’s most closed off economies need to be in place longer to be deemed irreversible. That’s led American Depositary Receipts of the nation’s largest companies to fall as much as 17 percent, and the local Merval benchmark index to tumble as much as 5.5 percent. Yields on benchmark bonds rose the most in a month.

Analysts weren’t the only ones that thought the upgrade was sealed. Argentine Treasury Minister Nicolas Dujovne, who said “conditions are ripe for an upgrade,” will now have to wait at least two years to see Argentina’s return to accessing the trillions of dollars that an emerging market ranking brings.

Argentina has declined to comment.

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