Why Argentine stocks rose sharply on Wall Street after the runoff and what’s coming

Shares of Argentine companies listed on Wall Street rose up to 40%, led by YPF’s ADR and sovereign bonds in dollars They also advanced strongly in the United States on the first day with Milei as president-elect. All ADRs rose by around 20%from the financial sector, with special strength from energy companies.

Stocks on the rise on Wall Street: the reasons

For Andrés Reschini, analyst at F2 Soluciones Financieras, this market reaction is mainly due to the fact that investors’ attention was focused mainly on the tone of the winner’s speech. “Milei talked about respecting commitments, putting fiscal accounts in cash, fixing problems with the Central Bank (BCRA)”, he points out. So, for him, that would explain the initial positive reaction.

And it is that Salvador Vitelli, analyst at Romano Group, “Milei is a very pro-market politicianwhich proposes a scenario of opening the economy, deregulation and lower taxes, which is music to the market’s ears.”

He thinks the same Joel Lupieri, from Epyca Consultores, who assures that “assets rise due to the expectations generated by Milei’s first statements, which may have been very positive for the market.” He refers to the fact that she spoke of state cutsaid Argentina will comply with all obligations that has taken and promised of a reduction of the deficit and inflation. Likewise, he mentions that the fact that he said that is going to privatize several companieslike YPF, generated investor enthusiasm.

But, for him market expert Marcelo Bastanteanother of the main reasons for this increase could lie in the fact that “stocks in dollars were very cheapif the price of the MEP dollar, the blue or any exchange rate is taken into account, even with respect to the official exchange rate”. This is mainly noticeable in the case of banks, whose Actions are going up because they were very stragglers

Beyond that, going forward, consider that, a priori, those with the greatest potential for growth are those linked to the export sectors or those with a strong high correlation with the dollaras Aluar, Ternium and YPF. He also sees a good opportunity in “utilities and those in the energy sector, with the expectation that there will be a recomposition of rates.” And, in that sense, he mentions Edenor, Central Puerto and Pampa Energía, among others, as interesting options.

What’s coming for stocks

For him economist expert in capital markets Christian ButelerMeanwhile, what was seen this Monday responded to the fact that, although there was a market that thought that the winner was Massa, with the result on the table, “you see that there are good chances of growth with Javier Milei”. This translates into an important reaction and considers that this indicates that the forward expectations are positive.

However, Reschini indicates that, “tThere are still many details missing and the transition can be noisy and generate volatility” going forward. He agrees, thus, with Bastante, who points out that “we have to be cautious and wait for the first business day to see what the transition will be like and mainly hope that Milei confirm your economic team.”

In that line, it indicates that you have to wait to confirm and see If this initial rise that occurs today in the American market is due to a genuine movement in value of the companies or is it that a exchange rate rise. And, although it is true that the Argentine stocks outside they are rising in dollarswarns that, “sometimes, the reading is not so ‘linear’ and they may be rising due to the effect of the expected exchange rate.”