Argentina was downgraded on a prestigious global benchmark index for investors prepared by finance company Morgan Stanley. After an annual review, the company said that from next year the country will no longer be part of the emerging markets index – including Brazil, Chile, China, Mexico, among others – and should appear in a category of “autonomous markets “, along with countries like Zimbabwe, Botswana, Ukraine, Jamaica and Panama.
“Since September 2019, international institutional investors are subject to the imposition of capital controls on the Argentine stock market”, said Craig Feldman, Global Head of Index Management Research and member of the MSCI Index Policy Committee (Morgan Stanley Capital Index). “The extended stringency of unresolved capital controls is not in line with the MSCI Emerging Markets Index market accessibility criteria. This has led to the reclassification of Argentina’s MSCI Index from Emerging Markets to Autonomous Markets.”
The effects of the downgrade appeared as early as this Friday morning, when the shares of Argentine companies began to fall. YPF, for example, which is listed on Wall Street, traded at a 9.2% drop earlier in the day. Specialists also point out that, after the decision, Argentine companies may have more difficulties in obtaining financing.
“Autonomous markets are markets with many regulatory and/or political problems and very unattractive for the international investor. This is in line with the government’s anti-market measures and speeches,” Maximiliano Suárez, analyst at Grupo Bull Market, told Argentine newspaper Cronista . Since 2019, Argentina has been tightening capital control measures to try to prevent dollars from leaving the country. The MSCI had been warning the Argentine government that the country would be downgraded if there was no change in these economic policies.
source https://pledgetimes.com/argentina-downgraded-in-benchmark-index-for-investors/
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