Despite the fact that its benchmark Merval index is up over 50% this year–making it the world’s fifth-best performer according to Bloomberg–Argentina lost its position in the benchmark emerging-market stock index this past week and joined MSCI Inc.’s “frontier” category, a classification based on a given market’s size, liquidity and economic development.  Analysts told Bloomberg that the change “may lure funds to the nation and extend a three-month equity rally,” especially those portfolio managers who are feeling the start of a new secular bull market in commodities–crude, for instance–and those who are betting that the government’s days of defaulting on debt are fin.

“‘You’re getting fresh eyes with frontier investors taking a look at Argentina,’ said Paul Herber, who helps manage $5 billion at Forward Management LLC in Seattle, including the Accessor Frontier Markets Fund, and plans to buy Argentine shares. ‘We’re not looking to take any heroic bets in Argentina but we’re certainly comfortable with a market weight.’”

Index rally aside, there is still plenty in Argentina to be weary of.  Economist noted last month, for example, that “amid 17-19% inflation, the government of President Cristina Fernández de Kirchner is trying to control the prices of some locally consumed foodstuffs by sporadically preventing their export.  But agriculture earns Argentina much of its sorely needed foreign currency, so for produce that is allowed to leave the country Ms. Kirchner has hiked export taxes as high as 35%.”  Such policy is hardly assuring.