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  • Argentina ETFs- Brave Hearts Welcome 0 comments
    Nov 7, 2012 1:08 AM

    A traders' play by all means, nevertheless a brilliant short term investment.

    When testing South American waters for investing, surely the Brazilian Economic story is a household one, but amid the political chaos in the state of Argentina along with a lack luster market, most informed analysts tend to ignore the Argentine equities. A long term outlook is also not weak considering that the economy of Argentina[second largest in the South American continent] has recovered from 2002 woes where a 25% unemployment rate was a norm and the currency PESO saw a haircut of close to 70% against the US Dollar. Economy has already shown its ability to bounce back as it did grow uniformly at 9% between 2007 -2009.

    The Fling v/s the Marriage?

    Argentina based funds must be in a US Investors portfolio whatever may be the strategy. A hold or an entry may be recommended based on common facts that the South American nation has the highest Natural gas reserves in the world. It is the largest exporter of corn and third largest for Soy globally. This sector has to gain with global rising in food demands. What's holding the development as of now is lack of a stable Political structure and this very political insecurity harbors in, a smart short term investment that may spew lucrative returns.

    Although investors with a broad horizon may indulge in individual equities and funds alike, of course a thorough analysis and professional help is required, but for individuals aiming at a prompt gain, ETFs emerge as the Numero-Uno choice.

    Let's Take A Closer Look.

    The key to good returns, as like in any other economy lies in the stock-picking skills. This is where Argentina Funds score over any other investment tool, only because of their concentrated fund allocation. Global X ARGT 20 ETF is a pure play on this sector and invests smartly in large asset companies where half of this Argentine ETF's assets are deployed in equities actually listed in the Chilean, Italian and Canadian Exchanges, having major operations and assets in the fund's name sake country.

    Consider this! As soon as the current President Cristina Fernandez de Kirchner announced nationalization of YPF, major oil company in the country [also the heaviest stock in ARGT] the YPF equity plunged to 30% of its valuation hitting a 52 week low on heavy intraday trading. Whereas on the day of this announcement, Argentine 20 ETF [ARGT] was only down 1% and saw a maximum down side of $9.42 smartly recovering at $9.60 the same day. Considering the previous close at $9.70, this movement clearly indicates a positive bullish trend.

    The country is burning with the protests against The Fernandez rule and international lobby too does not approve of the fiscal policies of the Government. Any transition at the political front or even a wiser policy from the current regime will only infuse value in this fund. One of the two scenarios is likely to occur as the public of Argentina is now out on the roads and in no mood to tolerate the current leaders till their 2015 term.

    Individual Equities such as Mercado Libre [popularly called the Ebay of the Latin World] has heavy allocations in most Argentina ETF, are on growth trajectory as their business model is not restricted to Argentina, but is engaging the rising middle class of the entire South Americas. Telecom Argentina may outperform too and it has already indicated that with an upheld stature in the falling market.

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