The surprising electoral result fuels expectations of reforms, where the ruling party emerges more strengthened in Congress, triggering the appetite for Argentine assets.
The Argentine stocks and bonds fly up to almost 50% this monday in Wall Streetafter the failure of La Libertad advances in the general electionswhere the ruling party exceeded 40% of the votes and left the Peronist opposition around 31%.
The Global bonds in dollars They react with euphoria and climb up 24%led by Global 2035followed by the Global 2041 (+23%) and the Global 2038 (+23%)in a market that reacts with strong optimism due to the strong support of society for the Government, waiting for a second stage in which the economic reforms are carried out. In that context, country risk aims to break through 1,000 basis points.
From Max Capitalunderstand that the bond rally advances up to 30%, with spreads that can gradually converge “towards the floor of the cycle, around 550 basis points.” “On the short side, 2030 bonds would exceed 80, with spreads around 650 bp. The rally should be much stronger in long bonds“they added.
The enthusiasm is also replicated in the Argentine stocks listed on Wall Street: the ADRs shoot up to almost 50%with strong advances for Supervielle Group (+47%), BBVA (+42%), Galicia Financial Group (+39%) and Transportadora de Gas del Sur (+36%).
For his part, the S&P Merval It advances 18% to 2,449,457.73, while its counterpart in dollars flies 31.1% to 1,737.66 points. The dollar Cash with Settlement plummets 9.7%. The increases are led by Metrogas (+31.2%); Southern Gas Carrier (+30.7%); Transener (+28.8%).
The opinion of the markets after Javier Milei’s victory
“The magnitude of Milei’s victory is at the most optimistic end of pre-election expectations,” he said. Alejo Czerwonkochief investment officer for emerging markets in the Americas at UBS Global Wealth Management. “His party now has the political capital necessary to accelerate structural reforms”.
The results should also help dispel doubts about whether the Argentina will continue to receive crucial support from the US. Before the elections, the government of donald trump signed a swap line for US$20,000 million and is holding talks with a group of banks for an additional financing package for US$20,000 million.
Milei and his party emerged as “big winners with a renewed mandate,” he said Kathryn Exumco-head of sovereign research at Gramercy Funds Management. “With this victory, governors and politicians should be willing to work with Milei under the right conditions, opening the possibility of reforms”.
The decisive victory leaves Milei’s party in a good position to negotiate with other groups to approve the reforms, according to Joaquín Bagues, general director of local brokerage Grit Capital Group. “Let the party begin”said.
Source: Ambito
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