Argentina markets face election hangover
Argentina markets face election hangover
Argentina’s Market Shaken by Far-Right Libertarian’s Election Win
/cloudfront-us-east-2.images.arcpublishing.com/reuters/SJCVFZG2Q5I2XFJWKAHKNLIFQA.jpg)
Argentina’s markets were hit with an unexpected shock on Monday following the triumph of far-right libertarian candidate Javier Milei in the primary elections. Milei, who advocates for abolishing the central bank and dollarizing the economy, garnered an astonishing 30% of the vote, outperforming predictions and leaving more moderate candidates in his wake. As the primary serves as a dress rehearsal for the general election in two months, the surprising outcome has cast uncertainty over the upcoming race in October.
Milei, known for his rock-singing and wild-haired appearance, has disturbed the market’s equilibrium. His success in the primary has the potential to weaken the peso currency in popular parallel markets and put pressure on the previously rising bond prices. The unexpected nature of Milei’s victory has left the government on edge, with market experts anticipating increased tension in the exchange market throughout the week.
Argentina’s markets have been notoriously unstable due to years of economic crises. A similar shock result in the 2019 primary elections led to a crash in bonds and the currency, causing them to remain in distressed territory. The government’s attempts to unwind capital controls have largely failed, leaving the peso at bay. Milei’s victory adds an additional unknown factor to the equation, which could further undermine market confidence. However, this uncertainty could be mitigated by the upcoming challenges Milei will face in October and a likely November run-off, putting his ability to win over more voters to the test.
According to a note from Goldman Sachs prior to the vote, Milei supports more “radical policy proposals” such as dollarization and substantial spending cuts. His lack of an established political machine introduces even more uncertainty to the situation. In October, Milei will compete in a three-way race against former security minister Patricia Bullrich, who secured the main conservative Together for Change nomination, and Peronist coalition candidate Economy Minister Sergio Massa.
To win outright in October, a candidate must secure either 45% of the vote or 40% with a 10-point lead over the second-place candidate. Given the current circumstances, an outright winner seems unlikely, setting the stage for a head-to-head vote between the top two contenders in November.
- Javier Milei, an Argentine far-right outsider, shocks with primary ...
- Dell unit fined $6.5 million for misleading customers on discounts.
- Oil prices fall due to a stronger dollar and worries about China...
Ricardo Delgado, director of the Argentine economics consultancy Analytica, summed up the situation well, stating, “What we are left with is a much more uncertain scenario than the one we expected.” The unexpected rise of Milei and his proposed policies have injected a significant dose of uncertainty into the Argentine markets. As the general elections approach, market participants will be closely watching the changing dynamics and their potential impact on the economy.
/cloudfront-us-east-2.images.arcpublishing.com/reuters/P63MXHD5WFLL3NSBPCIEFFBSZM.jpg)
/cloudfront-us-east-2.images.arcpublishing.com/reuters/GFG674HAKRM7RLGHJ32ARDPUSM.jpg)
