The surge that kicked off in 2023 has faded, leaving the S&P Merval down 9% this year when translated to dollars. Back then, the Global X MSCI Argentina ETF led single-country funds. Today, the broad market has lost momentum.
Look under the hood and the split is stark. Using the blue-chip swap to convert the index to dollars, only two energy stocks have delivered double digit gains this year based on their US listings.
The bright spots are almost all in oil and gas from the Vaca Muerta shale. That gap widened after Milei's party won the 2025 congressional midterms. Since then, YPF shares are close to triple their previous level, Vista has climbed by more than 100%, and many banks along with domestically focused companies have struggled. The Merval has also advanced in dollars over that stretch, but the increase is roughly half the advance chalked up by the leading oil producers.
Earnings have backed the rally. With high prices influenced by the war involving Iran, the state-run YPF SA saw its shale output jump almost 50% year over year in the second quarter. Vista Energy SAB, together with Pampa Energía SA, posted sharp gains in production and profitability. Speaking from Bull Market Brokers in Buenos Aires, portfolio manager Ricardo Giménez said: "The performance of energy stocks has been driven half by oil prices and half by the reality of the sector." "Vaca Muerta companies have been increasing production, posting strong results and, in some cases, starting to generate positive cash flow."
Almost everything outside energy is sagging. Banks, construction and consumer-facing names are down this year. The lone major exception is Telecom Argentina SA, up about 5%, helped by mergers and acquisitions activity.
The macro picture mirrors the split. Economic activity fell 1.4% in July from a year earlier and 2.9% from June on a seasonally adjusted basis. Manufacturing ranked among the weakest areas, whereas mining kept expanding.
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Banks are feeling the pinch from rising delinquencies and a lending engine that has not yet kicked into gear. Construction is still waiting on an activity rebound. "The only thing driving the Merval today is oil and gas."
High international prices and the energy upswing are pulling in foreign currency. From January through July, Argentina posted a trade surplus exceeding $16 billion as exports rose. Much of the improvement stems from better terms of trade linked to the US - Iran conflict, and also from weaker domestic demand that is slowing import growth.
Those inflows have firmed up external accounts and are fueling a real appreciation of the peso. A stronger currency helps contain inflation by making imports cheaper, but it also softens demand for local goods and raises dollar-based costs for manufacturers facing foreign competitors. Some investors continue to view capital controls, plus the uncertainty before next year's election, as weighing on foreign investment. "Investors are still in wait-and-see mode and exchange controls are still in place," Polo said. And as Giménez put it, "If political risk remains, activity stays weak and businesses don't recover, there are few catalysts for the main sectors in the S&P Merval index to move significantly higher in the short term."
For anyone watching from the sidelines, the story is simple enough. Oil and gas are doing the heavy lifting, and the currency dynamics helping the macro picture are creating headwinds for much of everything else. How that split resolves will shape which Argentine companies get real tailwinds and which need a broader recovery to catch up.
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