The world's largest index aggregator, Morgan Stanley Capital Investment (MSCI) reported on Wednesday that it will keep open the consultation with the market regarding Argentina's situation for six more months. In this way, it temporarily left the market qualified as "emerging" and did not reduce it to "frontier market".

According to MSCI, in June it will announce its decision regarding the particularity of the country's situation with the new capital control. In a brief three-paragraph statement, the company said that "The objective of the consultation is to measure the total impact of the capital control on the investment process as well as the reproducibility of the specific index in particular in relation to the distribution of dividends. The prolonged application of capital controls by the Argentine authorities could eventually lead to the removal of the MSCI Argentina Indexes from the MSCI Emerging Markets Indexes".

It is worth remembering that in May of this year, the country was accepted within this category and Argentine shares listed in the New York Stock Exchange represent 0.26% of this investment indicator, compared to 7.26% for Brazil or 2.65% for Mexico.

As explained by the investment indexes compiler, the reason why the category is maintained is that only shares of companies listed abroad and with ADRs were admitted, but the fact that investors can not freely access the local stock market is an "anomaly" within the countries included in the classification of emerging markets because "free capital mobility is a key condition for access to this category.

The other concern of the market is the sustainability of dividend payments abroad, which so far have been made through the dollar accounts of companies, on which there are no guarantees for the future. As a matter of fact, article 38 in the new mega-bill sent to the Congress this week mentions that further market transactions could be included in the items taxed with the new 30% "as long as they imply the acquisition of foreign currency in direct or indirect manners".

"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 Argentina's MSCI Indexes as part of the Emerging Markets until the end of the consultation period. However, in the event of further deterioration in market accessibility that creates replicability issues, MSCI could decide to reclassify at an earlier date. Any such decision by MSCI will be preceded by a public consultation," the statement concluded.