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Early last century, Argentina was amongst the wealthiest countries worldwide. In fact, it once was dubbed “The Paris of Latin America” because of its beautiful architecture that resembled the fancy European style. However, years of socialist policies caused rampant hyperinflation. Hyperinflation is typically caused by a rapid and excessive increase in the money supply, often driven by unsustainable government spending, deficit financing, or the printing of currency without adequate economic backing. In fact, as of the last reading, Argentina has the world’s highest inflation (143% YoY), behind only Venezuela’s 362% rate.
Image Source: Charlie Bilello, Creative Planning
Last week, Argentina’s presidential election shocked the world and flipped the fledgling Latin American country’s politics on its head by electing libertarian outsider candidate Javier Milei. Javier Milei is an eccentric Argentine economist, author, and political commentator known for his outspoken and controversial views. A shift away from socialist policies can transform Argentina from uninvestable to chock full of opportunity. Below are three assets that should benefit from a turnaround in Argentina:
ARGT is an exchange-traded fund that tracks the performance of the Argentine stock market. If you believe in a turnaround in Argentina, ARGT allows US investors to hold a diversified portfolio of stocks from companies listed on the Argentine stock exchange. In reaction to last week’s election, ARGT soared 16% on volume four times the norm. Because power and distance are often correlated in the stock market, a 16% move on massive volume in a country’s stock market is very rare and indicative of the beginning of a move, not the end. Furthermore, simply surviving could mean a massive reversion to the mean trade is in store. For example, when Carvana (CVNA) avoided bankruptcy, it led to breathtaking gains of more than 1,000%
YPF is the largest Argentine energy company. Founded in 1922, YPF plays a crucial role in the exploration production, refininment, and distribution of petroleum and natural gas in Argentina. Though Argentina has struggled economically recently, the company is blessed with abundant natural resources. At ~2.5 billion barrels, Argentina has the fifth largest crude oil reserves in Latin America. A rebounding economy, more investment, and open trade should contribute to YPF’s prospects. YPF has beaten Zacks Consensus Analyst Estimates in six of the past eight quarters.
Image Source: Zacks Investment Research
Bitcoin & Bitcoin Proxies
Due to the unrelenting inflation in Argentina, Milei’s radical plan in office is to eliminate the Central Bank and “dollarize” the country. The economist believes that because of the poor reputation of the peso, it’s of little use in getting the country back on its feet economically. The result may be a monetary system in which a competition of currencies authorizes citizens to choose their preferred monetary system. Because Bitcoin already has a built-in, non-inflationary monetary system (only 21 million Bitcoin will ever exist), many Argentinians may decide to move in that direction. Bitcoin moved up 3% on the election news and recently hit all-time highs against the Argentine peso.
Image Source: TradingView
Bitcoin proxies such as MicroStrategy ((MSTR - Free Report) ),ProShares Bitcoin ETF ((BITO - Free Report) ), and the Grayscale Bitcoin Trust ((GBTC - Free Report) ) are good ways to play continued strength in Bitcoin.
Bottom Line
If Argentine president-elect Javier Milei can turn the economy around in Argentina, the crisis will lead to opportunity for investors. ARGT, YPF, and Bitcoin stand to benefit the most.
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Argentine Election Fallout: 3 Assets to Benefit
Early last century, Argentina was amongst the wealthiest countries worldwide. In fact, it once was dubbed “The Paris of Latin America” because of its beautiful architecture that resembled the fancy European style. However, years of socialist policies caused rampant hyperinflation. Hyperinflation is typically caused by a rapid and excessive increase in the money supply, often driven by unsustainable government spending, deficit financing, or the printing of currency without adequate economic backing. In fact, as of the last reading, Argentina has the world’s highest inflation (143% YoY), behind only Venezuela’s 362% rate.
Image Source: Charlie Bilello, Creative Planning
Last week, Argentina’s presidential election shocked the world and flipped the fledgling Latin American country’s politics on its head by electing libertarian outsider candidate Javier Milei. Javier Milei is an eccentric Argentine economist, author, and political commentator known for his outspoken and controversial views. A shift away from socialist policies can transform Argentina from uninvestable to chock full of opportunity. Below are three assets that should benefit from a turnaround in Argentina:
MSCI Argentina ETF ((ARGT - Free Report) )
ARGT is an exchange-traded fund that tracks the performance of the Argentine stock market. If you believe in a turnaround in Argentina, ARGT allows US investors to hold a diversified portfolio of stocks from companies listed on the Argentine stock exchange. In reaction to last week’s election, ARGT soared 16% on volume four times the norm. Because power and distance are often correlated in the stock market, a 16% move on massive volume in a country’s stock market is very rare and indicative of the beginning of a move, not the end. Furthermore, simply surviving could mean a massive reversion to the mean trade is in store. For example, when Carvana (CVNA) avoided bankruptcy, it led to breathtaking gains of more than 1,000%
Image Source: TradingView
Yacimiento Petroliferos Fiscales ((YPF - Free Report) )
YPF is the largest Argentine energy company. Founded in 1922, YPF plays a crucial role in the exploration production, refininment, and distribution of petroleum and natural gas in Argentina. Though Argentina has struggled economically recently, the company is blessed with abundant natural resources. At ~2.5 billion barrels, Argentina has the fifth largest crude oil reserves in Latin America. A rebounding economy, more investment, and open trade should contribute to YPF’s prospects. YPF has beaten Zacks Consensus Analyst Estimates in six of the past eight quarters.
Image Source: Zacks Investment Research
Bitcoin & Bitcoin Proxies
Due to the unrelenting inflation in Argentina, Milei’s radical plan in office is to eliminate the Central Bank and “dollarize” the country. The economist believes that because of the poor reputation of the peso, it’s of little use in getting the country back on its feet economically. The result may be a monetary system in which a competition of currencies authorizes citizens to choose their preferred monetary system. Because Bitcoin already has a built-in, non-inflationary monetary system (only 21 million Bitcoin will ever exist), many Argentinians may decide to move in that direction. Bitcoin moved up 3% on the election news and recently hit all-time highs against the Argentine peso.
Image Source: TradingView
Bitcoin proxies such as MicroStrategy ((MSTR - Free Report) ), ProShares Bitcoin ETF ((BITO - Free Report) ), and the Grayscale Bitcoin Trust ((GBTC - Free Report) ) are good ways to play continued strength in Bitcoin.
Bottom Line
If Argentine president-elect Javier Milei can turn the economy around in Argentina, the crisis will lead to opportunity for investors. ARGT, YPF, and Bitcoin stand to benefit the most.