An exchange-traded fund tracking Argentine stocks that beat all peers last year faces a key test as opposition to President Javier Milei’s shock therapy begins to mount.

The Global X MSCI Argentina ETF was the best-performing single-country equity ETF in the world in 2023, with returns of 53%, data compiled by Bloomberg show. The fund, one of the main securities for investors interested in putting money in a country where access to local markets is complicated by capital controls, saw assets jump four-fold in the past year, to $124 million.

The ETF attracted about $30 million of inflows in December alone, the most since its launch in 2011, as Milei took office and announced a slate of measures to shrink the state and try to stem inflation that’s running at 160% a year. Investors, who poured another $2 million into ARGT on the first US trading session of 2024, see additional gains hinging on his ability to push through a contentious reform agenda with little support in congress.

“There’s upside if things stay on track,” said Greg Lesko, managing director at Deltec Asset Management LLC in New York. “Protests and the courts will be a challenge.”

Milei’s “shock therapy” package included devaluing the peso by more than 50%, along with massive cuts to government spending equivalent to almost 3% of gross domestic product. The IMF cheered on the plans, while Wall Street banks including Goldman Sachs got bullish on Argentina’s battered sovereign bonds.

On Wednesday, Milei suffered his first judicial setback as the country’s national labor appeals court suspended a portion of his emergency decree aimed at overhauling the economy. Argentina’s top labor unions have called for a nationwide protest against his plans later this month.

One of the architects behind Milei’s reform blitz said in an interview last week that he’s just getting started and that new changes will be unveiled soon regardless of potential social unrest and protests.

The ETF is down 2.8% this week amid a broad selloff in risk assets as traders reprice odds of interest rate cuts in the US. Argentina’s benchmark bonds due in 2030, meanwhile, have slipped about 1 cent over the same period.  

This article was provided by Bloomberg News.