🇦🇷 🔦 Investment Shifts

There have been quite a few shifts in Argentina's investment landscape recently. For one, Brazil's foreign direct investment (FDI) into the country has tripled in the past two years.

In Q1 of 2022, Brazilian companies injected $435M into the economy and, according to the latest BCRA report, that number surged to $1.44B in the first quarter of 2024, surpassing the US and matching Spain as Argentina's top foreign investor.

But it's not all rosy. Up until 2021, investments were a healthy mix of debt and capital. The former is arguably preferable as it reflects investments that develop new projects and involves more "skin in the game."

Argentina's debt-driven investment surge

Today, most investments (53%) are in the form of debt, indicating that investors still hesitate to commit with equity or capital in Argentina's economy. In fact, capital investments are just a quarter of what they were five years ago.

But is Milei attracting capital back to Argentina? For the first time in five years, Q1 of 2024 saw an increase (37%) of capital invested compared to the previous year.

And who's leading the capital invested? The answer is much more surprising than Brazil.

South Korea is Argentina's top capital investor in 2024

South Korea has led the pack in 2024, accounting for 32% of the $366M of capital invested in the first 3 months this year, followed by the US with 30%.

We wish we knew where the capital went. BCRA labeled it all as "Confidential" in their data reporting. We do know that many South Korean companies, such as Samsung, LG, and POSCO (a steel manufacturer), have a presence in Argentina. Those three companies alone are worth a combined $300B. We also know that Argentina's exports to South Korea are approaching $1B this year, representing a 20% surge compared to 2023.