Argentine ETF surges after election, led by small investors

5:35 pm Monday, November 20th, 2023

By Suzanne McGee

(Reuters) -An exchange-traded fund (ETF) focused on Argentina’s stock market surged in New York on Monday after radical libertarian Javier Milei won the country’s presidency.

The Global X MSCI Argentina ETF, which offers exposure to a basket of Argentina’s most liquid stocks, soared nearly 11.5% on Monday after trading as much as 13.5% higher and hitting its highest level since September.

While the South American country’s markets were closed on Monday for a local holiday, U.S.-listed shares of Argentinian companies also surged in U.S. trading.

The gains for the ETF came on a high number of small trades, Todd Sohn, an ETF analyst at Strategas in New York, said.

By the time the closing bell rang, the value of trading in the ETF approached $26 million, compared with an average of about $1 million a day throughout 2023. That’s the second-most active day of trading ever recorded for the ETF, Sohn said. He added that most trades were blocks of 100 shares or even fewer.

“There seems to be a lot of random trading by retail investors playing the volatility” following the election news and amid speculation about Milei’s proposals to tackle Argentina’s economic woes, Sohn added.

Some of the largest investors of record in ARGT as of Sept. 30 include hedge fund Millennium Management LLC, which could not immediately be reached for comment.

The roster of large shareholders also includes ETF market makers and wealth management and advisory firms catering to high-net worth individuals and families.

ARGT, one of a number of small country-specific ETFs, has only about $56 million in assets. By far its largest holding is ecommerce company MercadoLibre Inc, which accounts for 28% of the fund.

Other Argentina stocks that saw their U.S. listed shares rally were oil company YPF, up 40.1%, and financials Banco Macro and Grupo Financiero Galicia.

“These small country funds are ideal vehicles for small day traders who jump on events” like Sunday’s presidential election in Argentina, Sohn said.

(Reporting by Suzanne McGee; editing by Megan Davies, Andrew Heavens and Cynthia Osterman)