(Adds context on Argentina)
NEW YORK, Sept 26 (Reuters) - FTSE Russell on Thursday held back from upgrading Argentine equities to emerging market status and removed the South American country from a list of possible upgrades “as a result of the imposition of capital controls” earlier this month.
The move, which retains Argentina as a “frontier” market, is a blow for President Mauricio Macri as he looks to stabilize the country’s markets, which crashed sharply after he was soundly beaten by a center-left opponent in a primary election in August.
A classification as emerging market would have likely increased the flow of badly needed cash to the country’s equity markets. The market sell-off that followed Macri’s August defeat took the peso currency and some of Argentina’s bonds to record lows, prompted the government to announce plans to renegotiate its debts and to impose currency controls to staunch a sharp outflow of dollars. The volatility prompted rival index provider MSCI, which lifted Argentina to emerging markets status earlier this year, to say it was closely monitoring developments. (Reporting by Rodrigo Campos, writing by Adam Jourdan; Editing by Rosalba O’Brien and Lisa Shumaker)