News has filtered through today that president Cristina Kirchner has ratcheted up the pressure on Repsol YPF by also moving to take control of its gas unit, just days after seizing its oil reserves.
While Livingston accepts that the news highlights the ongoing political risk in the region, he doesn’t think this ideology will spread beyond Argentina.
"Cosmetically, this is a negative for Latin America from a reputational standpoint, but in reality Argentine stocks represent a very small market for international investors," he explained. "Argentina was downgraded to frontier status by MSCI in early 2009 because of capital controls."
"These actions were well telegraphed and represent a continuation of the populist policies of the Kirchner administration. While Argentina is in many ways following the same footsteps as those laid out by Venezuela and Bolivia, the others – namely Peru and Brazil – have all proceeded with a left-of-centre agenda while not disenfranchising the foreign investor community."
The news seems to have had little effect on Latin America as a whole so far; according to FE data, MSCI Latin American has stayed relatively flat in the last week, even though the MSCI Argentina index is down more than 20 per cent.
Performance of indices in 2012
Source: FE Analytics
As long as investors are willing to put up with the volatility associated with Latin American markets, Livingston says he sees no major stumbling blocks on the horizon.
"Political risk is a very real risk when investing in Latin America due to the wide disparities of rich and poor, but at the moment, the current political risks in our market appear benign," Livingston continued.
The Fidelity Latin America fund doesn’t currently have any direct exposure to Argentina. It has one single holding – Mercadolibre – listed in the country, but Livingston says this isn’t reliant on government policy.
"It’s a US stock that generates around 80 per cent of its revenues outside of the country," he explained.
According to FE data, nine funds have more than 2 per cent direct exposure to Argentina, including the Aberdeen Emerging Markets and Latin American Equity funds. Templeton Latin America and Skandia Emerging Market Debt have the highest weightings, with 4.4 and 5.86 per cent respectively.