No se rompan mas vuestras cabezas elucubrando hipótesis acerca de la baja de ALUA, TXAR, SUPV y alguna otra. MSCI acaba de publicar la cartera de 10 acciones argentinas que integrarían desde el próximo mayo su índice emergente. De los 4 bancos argentos que tienen ADR, sólo SUPV no está incluido. MSCI recomienda posicionarse en los papeles más líquidos, y ALUA siquiera tiene ADR. Es un reposicionamiento de carteras de corto y mediano, a la larga prevalecerá el valor de cada papel.
Argentina Equity Strategy * MSCI Update: Lower Weight & New Constituents
By Diego CeledonAC, Emy Shayo Cherman, Nur Cristiani, CFA, Pedro Martins Junior, CFA
Click here for the full Note and disclaimers
As we get close to MSCI’s Emerging Markets Index Semi-Annual review by May 2019 (May 31st), we decided to update our estimates regarding Argentina’s weight and composition in the EM index as we consider it useful to update the potential inflows this inclusion might trigger. Based on current market prices, we estimate Argentina would weight 0.31% of the EM Index, down from 0.36% in our last exercise in early January, implying total inflows of close to US$1.1bn from passive funds. The decline in weight was mainly driven by the outperformance of EM equities relative to Argentina of around +8.5%USD since our last update. In terms of constituents, we still expect the Standard Index to have 10 stocks; however, we now believe Corporacion America will be included, while TGS would not make the cut and would only be part of the Small Cap Index (more details on Table 1). In terms of trading days, the expected flows represent on average 16 trading days, ranging from 9 days in the case of Grupo Galicia to 38 days in the case of Telecom Argentina, which in our view could be the most benefited stock by this event. We remain UW Argentina in our model portfolio given the uncertainty on presidential elections and worsening inflation expectations. However, we acknowledge that MSCI inclusion in EM could be a positive driver, which we recommend positioning via the stocks that concentrate the highest amount of trading days.
Our updated estimates imply Argentina would weight 0.31% of the EM Index and 2.2% of LatAm. The potential weight is determined by the float adjusted market cap of the 10 stocks that we estimate would make the cut to the Standard Index. The current adjusted market cap would add to US$16.3bn, equivalent to 0.31% of the EM Index adjusted market cap and 2.2% of the LatAm Index size. This has declined since our previous update of 0.36% of EM and 2.8% of LatAm estimated in January due to the underperformance of the Argentine market.
The new estimated weight implies US$1.16bn of potential inflows from passive funds. The main source of inflows the EM Index inclusion triggers is the one related with the funds that track MSCI EM. According to our EM Flows Weekly report, there are currently US$378bn of AUM in ETFs (passive) and US$1,016bn of AUM in retail funds (active) tracking EM. In the case of passive investors, as they currently hold no positions in Argentina, to reach the new positioning they would have to invest 0.31% of their AUM, which would imply US$1,162mn of flows into Argentine equities. The two stocks that show the highest amount of trading days are Telecom Argentina (Neutral, Andre Baggio) and Central Puerto (OW, Henrique Peretti), with 38 and 28 days, respectively. According to our estimates, the Argentina Standard Index would have 10 constituents. According to our estimates, Corporacion America (not covered) would now also be part of the Standard Index, concentrating inflows equivalent to 19 days of trading and Transportadora del Gas del Sur (TGS, Not Rated) would not be included in the EM index. Furthermore, Despegar.com is closer to the cut to be part of the EM Index. The rest of the list remains the same and details can be found on Table 2. We estimate there would be 8 stocks in the Small Cap Index; these are the names to watch in case they can make it to the Standard Index. The full Argentina IMI would be constituted by 18 stocks, 10 in the Standard Index and 8 Small Caps. The three stocks closer to making the cut to the Standard Index are Despegar.com (not covered), TGS (not covered) and Arcos Dorados (ARCO, Not Rated). Depending on how market performance evolves these stocks could make it to the Index by May.
Table 1: MSCI Argentina Standard Index and Inflows Estimate
download/file.php?mode=view&id=89923
As of March 2019
Source: MSCI, Bloomberg, J.P. Morgan
Table 2: MSCI Argentina IMI Index Estimate
download/file.php?mode=view&id=89922
As of March 2019
Source: MSCI, Bloomberg, J.P. Morgan