Yesterday I reported to you on the election outcome in Argentina and described the spectacular economic turnaround the country may be facing now. With fantastic opportunities for you as an investor!

The new president’s program is well received by the economy. Less bureaucracy, fewer taxes, privatization – that’s exactly what the stock markets appreciate! But how can you benefit from it?

Why Argentine stocks can be so spectacular But there is something else. The Argentine stock index is called MERVAL (MERcado de VALores de Buenos Aires, German: Stock exchange of Buenos Aires). It comprises the 17 largest and most liquid companies of the Bolsa de Comercio de Buenos Aires, the Buenos Aires stock exchange.

The index is spectacular in a way. Because it tends to very strong price movements from time to time. In 1989 the index rose from 0.20 points to 37.27 points. That is an annual return of an incredible +18,535.00%!

This market is the best in 2023! The performance of the past 12 months can also be seen: a plus of 370.20%! So the MERVAL was probably the best stock index in the past 12 months.

Argentine stocks recently with fantastic price gains

Source: finanzen.net

Now comes the catch: if you subtract the devaluation of the Argentine currency in the same period, then (especially for you as a euro investor) a significantly lower profit remains.

The spectacular rise of the MERVAL this year is only partly due to the „reform fantasy“. A large part of it is simply due to the devaluation of the Argentine peso.

Nominally, the companies are indeed worth more (in pesos). In hard currency (i.e. euros or dollars), however, they only retain their value. At least, one could say. Stocks do offer a certain inflation protection.

Are Argentine stocks now a buy? Because of the weak peso and the expected currency losses but also because of the weak productivity of the Argentine industry, I therefore advise you against an investment in the MERVAL as a whole.

At the same time, much of the reform fantasy is already reflected in the prices. But with a few selected individual values this looks different. They also make nice profits and grow faster than average. Find out more about this in my detailed article next week.