Discover more about Argentina’s investment potential
and find out why it has such potential for growth after years of economic strife.
Why Argentina Has Investment Potential
Until recently foreign investors simply stayed away from Argentina, while many locals preferred stashing their money in other countries or in safety deposit boxes. This started changing with the election of President Mauricio Macri in 2015. Known for being investor-friendly, President Macri has brought about massive change and previously unthought-of strategies are taking root – like impact investing.
It’s All About Change
Argentina’s emerging markets are growing and as overall market conditions are improving, the sovereign risk is falling. Impact investment, which was vehemently opposed by the previous government, is being embraced, and conditions favourable to these investments are being fashioned. It is expected that new capital law will be sent to congress soon, and that legislation providing incentives to companies pursuing goals in line with the environment or social upliftment will be implemented. Impact investment is growing fast and furiously in Argentina.
Solving Social Problems
One of the first steps in a sector that was practically non-existent until less than a year ago is an exciting collaboration. The Inter-American Development Bank’s Multilateral Investment Fund came to an agreement with the technology focused venture capital group NXTP Labs. Another interesting development was that the founder of the private equity group Grupo Pegasus, Mario Quintana, left Pegasus and joined President Macri’s cabinet. With team members like Quintana occupying powerful positions in the government, there has been a complete transformation. In strong contrast to the previous government, which was vehemently opposed to the idea of using private capital to solve social problems, Macri’s government is doing everything in its power for social upliftment.
Does This Mean It’s an Ideal Time to Invest?
According to Wharton lecturer Stephen Sammut, “Savvy people looking for a foothold in Latin America may see investment in Argentina as a golden opportunity.” Sammut believes that the recent progress made in Argentina will contribute to the country soon graduating from Frontier to Emerging Market status, and that it is an incredibly good time to invest in the country. Mauro Guillen, Wharton management professor, is also highly optimistic and said that, “Macri is making all the right kinds of decisions.”
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