MSCI announcement about Argentina Index

MSCI announced today that it will continue consulting with market participants on the replicability and classification of the MSCI Argentina Indexes. The aim of the consultation is to assess the overall impact of capital controls on the investment process, as well as specific index replicability issues, particularly related to dividend distribution. Prolonged application of capital controls by the Argentine authorities could ultimately lead to the removal of the MSCI Argentina Indexes from the MSCI Emerging Markets Indexes.

The MSCI Argentina Indexes remain replicable at present because only foreign listings and depositary receipts are included in the indexes. International investors cannot access the domestic equity market due to the capital controls imposed by the Argentinian authorities. These restrictions constitute an anomaly within the Emerging Markets universe, as capital mobility is a key requirement for inclusion in the MSCI Emerging Markets Index.  Also, future dividend distribution remains a concern as the current practice of utilizing offshore foreign currency accounts may not be sustainable or attainable for Argentinian companies in the future.

The results of the consultation will be communicated as part of the MSCI 2020 Market Classification Review, which will be announced in June. MSCI intends to continue classifying the MSCI Argentina Indexes as part of Emerging Markets until the end of the consultation period. However, in the event of further deterioration in market accessibility which leads to replicability issues for the MSCI Argentina Indexes, MSCI may decide to reclassify the MSCI Argentina Indexes at an earlier date. Any such decisions by MSCI would be preceded by a public consultation.