Argentina, in the financial “death group”: what is the comparison with the other countries of the MSCI Standalone ranking

In the “Standalone” Cup, Argentina does not achieve great results in economic terms if we look at the other “teams” of this “Group of Death” in financial terms.

As of yesterday, the country has been in this category – below emerging and border markets – according to the MSCI index, along with Jamaica, Trinidad and Tobago, Bosnia, Ukraine, Botswana, Zimbabwe, Lebanon, Panama, Malta and Bulgaria.

“The downgrade to Standalone is a decision not expected by the market, because the base scenario was the return to the border after 3 years” (Persichini)

How is Argentina doing in relative terms compared to the rest of these territories? If you look at inflation, the 50% of the last 12 months and the 48% that analysts are forecasting for this year are only exceeded by Zimbabwe, Lebanon and Palestine. In the first case inflation in the last year was 162%, in the second 120% and in the third 103%.

Otherwise, inflation over the past 12 months was 9.5% in Ukraine, 6.2% in Botswana, 4.8% in Jamaica, 3.1% in Bulgaria, 1.9% in Panama, 0.8% in Trinidad and Tobago and 0, 4% in Malta; The overall average was 37.6%, just above the 36.1% recorded by Argentina in 2020, according to official figures processed by GMA Capital.

Relative to GDP, Lebanon experienced a 25% recession in 2020, Panama 17%, Palestine 11%, Argentina 9.9%, Botswana 8.3%, Zimbabwe 8%, Trinidad and Tobago 7.8%, Malta 7.2%, Bosnia 5.5%, Ukraine 4.2% and Bulgaria 3.8%. For this year, an economic recovery of 12% is expected in Panama, 5.8% in Argentina, 5.7% in Palestine, 5.5% in Bosnia, 4.7% in Malta, 4.4% in Bulgaria, 4% in Ukraine, Bosnia 3.5%, Zimbabwe 3.1%, Trinidad and Tobago 2.1% and Jamaica 1.5%.

In terms of GDP per capita, Malta has a level of 28,294 USD, Trinidad and Tobago of 15,384 USD, Panama of 12,373 USD, Bulgaria of 9,919 USD, Argentina 8,555 USD, Botswana $ 6,781, Bosnia $ 5,913, Jamaica $ 5,096, Palestine $ 3,042, Lebanon $ 2,802 and Zimbabwe $ 1,385.

According to Furiase, unlike almost the rest of the group of countries except Zimbabwe, Lebanon and Palestine, Argentina stands out with its high and recurring inflation.

Regarding the benchmark interest rate for its bonds, Lebanon leads the group with 24.6%, followed by Argentina with 19.9%, Ukraine 6.7%, Trinidad and Tobago 3.8%, Jamaica 3.3%, Panama 2.6% and Bulgaria and Malta 0.5%.

In terms of risk rating, for Standard & Poor’s agency the worst score is Lebanon’s sovereign debt with a selective SD of default, followed by Argentina slightly above, with CCC + then the others are in step B, except Malta which obtains the best score with A-.

Regarding their place in the United Nations Human Development Index, Malta leads the peloton in 28th place, Argentina 46th, Bulgaria 56, Panama 57, Trinidad and Tobago 67, Ukraine 74, Lebanon 92, Botswana 100, Jamaica 101, Palestine 115 and Zimbabwe finish at 150 out of 189 countries participating in the ranking.

Nery Persichini from GMA said Infobae that “the downgrade to Standalone is a decision not expected by the market, because the base scenario was to return to the border after 3 years”. Now, “Argentina finds itself without the possibility of receiving passive flows of institutional funds in stocks just for the fact of belonging; the obligations would not be affected by this novelty ”. In addition, “our economy suffers further reputational damage by being placed in a marginal category with countries suffering both civil wars and economic, humanitarian and social calamities.”

In any case, he felt that “the move is late; It’s the equivalent of looking in the rearview mirror: Even though these days there may be a purge in stocks to correct the frustrated bet on the frontier, the change does not change the general equation as the market moves forward. always.

“The possibility of an agreement with the IMF with a credible and sustainable macro program, as well as the elections are the driving forces to be taken into account,” said Persichini.

For his part, the director of Anker Latin America, APC Furiase, asserted that unlike almost the rest of the “Death Group” – with the exception of Zimbabwe, Lebanon and the Palestinian Territories – Argentina stands out for its high and recurring inflation.

“Inflation is back in the 50% zone and with the risk of entering a higher inflation regime due to all the pending adjustments. With the presence of capital controls, these are the main points of difference with the rest, ”he stressed.

As, Diego Martinez Burzaco, head of research and strategy at Inviu, estimated that due to the MSCI’s decision, there will be more “downward pressure from below, no doubt, but there was more no one outside Argentina “.

“This compromises, yes, the possibility of returning to the big leagues, in the medium term”, he admitted, in a scenario which seems more and more utopian.

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