Unexpected. This is the first reading of the market after the surprise generated by the good choice of javier milei in the Primary, open, simultaneous and mandatory elections (PASSED). If they seemed convinced of anything, it is that the opposition was going to make a difference over the ruling party. However, the flow of votes reached by the candidate of La Libertad Avanza generated endless questions. In fact, within Possible scenarios the three-thirds choice seemed the least contemplated and few trusted that the Libertarian candidate could get more than 20%. And now, what can happen to bonds, stocks and the dollar?
As usually happens in every election, the reaction of financial assets expresses the expectation of investors regarding the future of Argentina. This scenario – which, if we remember, had been mentioned by Cristina Kirchner some time ago – would leave a new Argentine government in charge of an inexperienced candidate in the middle of a major social and economic crisis.
As soon as the first trends were known, the crypto dollar it shot up to $675, marking a strong jump from what it was trading last Friday, when it oscillated around $591. This Monday morning, the average value is already at $689. All eyes now turn to the dollar, bonds and stocks (and open-ended questions).
Dollar, stocks and bonds: an overreaction is expected
“An extraordinary choice for the market that will make raise stocks and bonds since the political picture is reconfigured towards a ballot between two figures very pro-market and deregulation. Now, Milei took advantage of what the market discounts that there will not be a devaluation but a dollarization so there will be more demand for coverage. Given the current context of shortage of reserves, it could be forced to drop the exchange rate. Days of one are coming overreaction of the foreign exchange market”, expressed in dialogue with Ambit, the economist Natalia Motyl.
Meanwhile, his colleague Frederick Glustein He affirmed that: “People voted for the market and free dollar, without stocks and less taxes. And the crypto dollar flew with the expectation of results. That will necessarily translate into an increase in free dollars, both blue and CCL. Potentially there could be a effect negative on the stock market although I would be cautious, although there will be movements, especially in bonds”.
For his part, the analyst Andres Reschini stressed that “Milei is the candidate who with has communicated its government plan more clearly“. However, he stated that “there are many doubts about its ability to execute and also the results that it would have if it were to be executed. Probably in the market the caution and uncertainty and for now the position will be defensive which could put more pressure on the TC”.
F3fFcgdXUAM1g2l.png
According to Delphos Investment, which coincides with the previous analysts is the triumph in the PASO: “Milei is synonymous with uncertainty and fear for the establishment, which will make short-term trading difficult. A bad choice of JxC adds an unexpected element, but a worst of Peronism partially rebalances the panorama. stage of thirds it just brings more uncertainty, and short-term uncertainty is not good. We expect the first reaction from investors to be one of caution.
“We see that in the short term, instability would increase within a transition that is NOT ORDERED OR COORDINATED. This would imply greater exchange rate instability and inflationary acceleration. That is, nominality would accelerate. The Debt in Pesos would remain in limbo, requiring more details from Milei and equipment. We continue to believe that hard dollar bonds are the best “risk/reward” asset on the Argentine menu, understanding that they could find themselves under pressure in the short term in the face of greater local uncertainty, but they reinforce their good medium-term arguments in the face of a scenario of greater macro-economic order in the future”.
“This is a scenario in which the government comes out weaker, with more currency gapmore inflation and in a more complex context for the central bank (…) Possibly people want to dollarize now just in case, we will have to see if it is convenient for the central bank to intervene now or wait,” said Sebastián Menescaldi of EcoGo.
“The surprisingly strong showing of self-proclaimed far-right ‘anarcho-capitalist’ Javier Milei in Argentina’s primary elections suggests there is popular appetite for a shock therapy-style approach to tackling problems in the economy,” Capital Economics said.
He added that “this could ultimately be a good thing for financial markets“.
“The question continues to see what the candidates transmit, if there is a way to stop Milei’s progress. The expectations for the dollar are not good,” said Guido Lorenzo, from LCG.
“What we have left is youA much more uncertain scenario than we expected“said Ricardo Delgado, director of the consulting firm Analytica.
Source: Ambito

I am a 24-year-old writer and journalist who has been working in the news industry for the past two years. I write primarily about market news, so if you’re looking for insights into what’s going on in the stock market or economic indicators, you’ve come to the right place. I also dabble in writing articles on lifestyle trends and pop culture news.