One of the world’s largest benchmark index providers has warned Argentina and Turkey could soon be removed from the MSCI Emerging Markets Index should it become increasingly difficult for foreign investors to access their respective equity markets.
“While volatility increased dramatically due to the Covid-19 pandemic, global equity markets remained accessible and continued to function well, allowing issuers to raise capital and investors to manage risk during the crisis,” Dimitris Melas, global head of equity research and chairman of the MSCI Index Policy Committee, said in a statement on Tuesday.
However, two important emerging markets, Argentina and Turkey, “suffered substantial deterioration” in market accessibility over the last 12 months, Melas continued. “That could lead to their exclusion from the MSCI Emerging Markets Index.”
The MSCI Emerging Markets index is a benchmark used by many global funds and exchange-traded funds. It captures large and mid-cap representation across more than two dozen countries and is often used as a measure of equity performance in global emerging markets.
The warning comes shortly after talks between Argentina’s government and international creditors to restructure $65 billion in debt hit a roadblock, leaving a deal hanging in the balance.