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Argentina\u2019s bonds, stocks and currency are surging after President Javier Milei\u2019s party won an overwhelming victory in a Sunday midterm election, a key requisite to keep economic reforms on track and a United States financial backstop in place.<\/p>\n
On Monday, international bonds rallied between 9 and 13 cents each, local stocks jumped over 20 percent and the peso strengthened some 6 percent to the dollar, halving its initial rally.<\/p>\n list of 4 items<\/span>end of list<\/span><\/section>\n Official results in Argentina\u2019s Sunday legislative elections show voters\u00a0strongly backed\u00a0Milei\u2019s free-market reforms and deep austerity measures, with\u00a0inflation falling\u00a0sharply since he took office nearly two years ago.<\/p>\n The unexpectedly strong showing came after the US pledged a combined $40bn to support Milei \u2013 a $20bn central bank swap line and a potential $20bn loan facility \u2013 and implied the backing was contingent on Milei\u2019s reform agenda.<\/p>\n \u201cHis victory was so, so much larger than expected,\u201d said Thierry Larose, portfolio manager at Vontobel Asset Management. \u201cPreviously he was in a state of survival, and now he\u2019s \u2026 in a very strong position to try to form tactical alliances and push some reforms that were completely out of reach.\u201d<\/p>\n The president\u2019s party, La Libertad Avanza (LLA), received 41.5 percent of the vote in Buenos Aires province compared with 40.8 percent for the opposition Peronist coalition, according to official results. The province has long been a Peronist stronghold, marking a dramatic political shift. Nationally, LLA took over 40 percent of the vote, a much better-than-expected result.<\/p>\n \u201cCritically, Milei\u2019s victory speech was notably moderate and cooperative, signaling willingness to work with non-LLA legislators on reforms,\u201d Christine Reed, emerging market fixed income portfolio manager at Ninety One, said in a note.<\/p>\n The country\u2019s international dollar bonds were pushing against historic highs posted earlier this year, with the 2038 maturity up 13 cents to 73 cents on the US dollar.<\/p>\n US-listed shares of Argentine companies also surged, with financial shares rising up to 50 percent and the Global X MSCI Argentina ETF adding 20 percent, after falling 10 percent year-to-date through Friday. Stocks traded on US exchanges jumped 34 percent.<\/p>\n The peso initially strengthened as much as 13 percent to the dollar at 1,320 per greenback and was last 5.8 percent stronger on the day at 1,410.<\/p>\n The currency\u2019s strength makes sense, especially with the backdrop of US support, according to Matthew Graves, portfolio manager for emerging markets debt at PPM America.<\/p>\n \u201cThe government has some breathing room now, and can take next steps from a position of relative strength,\u201d he said. \u201cWe still think the FX bands are better used as a tool to facilitate a transition to more of a true managed-float FX framework. Investors will be keen to understand what this path might look like, and how it will facilitate a more rapid accumulation and rebuild of FX reserves.\u201d<\/p>\n Argentina\u2019s assets have been on a roller coaster ride since Milei\u2019s party suffered a wider-than-expected defeat in a provincial vote in Buenos Aires last month.<\/p>\n The peso had weakened some 25 percent since mid-April\u2019s partial scrapping of foreign exchange controls, and close to 30 percent since the start of the year. On Friday, it touched a record closing low of 1,491.50 per dollar.<\/p>\n Argentina\u2019s international dollar bonds were among the worst-performing emerging market high-yielders this year to Friday, after having returned over 100 percent to investors in 2024<\/p>\n The local stock benchmark last month touched its lowest in a year. While it has since risen more than 20 percent, it is down nearly 30 percent from a record high set in January.<\/p>\n Now, the stronger position for Milei\u2019s party in the legislature will encourage more investment, investors have said, as electoral risk recedes. It also boosts hopes for reform-minded candidates even in the next general ballot in 2027.<\/p>\n \u201cThe midterms yesterday just give a longer horizon for potential foreign investments, both in financial assets and in real assets,\u201d said Graham Stock, senior sovereign strategist with RBC BlueBay Global Asset Management.<\/p>\n While some still anticipate a\u00a0reform to the foreign exchange framework\u00a0that would encourage the accumulation of reserves, with a wider band or a free float of the peso among the options, confidence in Milei\u2019s reform outlook could naturally strengthen the currency, RBC\u2019s Stock said.<\/p>\n Carmen Altenkirch, an emerging markets sovereign analyst at Aviva Investors, said the results could kick off a \u201cvirtuous cycle\u201d in which locals begin selling dollars again.<\/p>\n \u201cI think a stronger exchange rate is feasible,\u201d Stock said, adding that depleted dollar reserves were a key weakness.<\/p>\n \u201cThey need to take advantage of peso strength to buy up dollars and build those reserves up, which they can do with the current regime,\u201d he said.<\/p>\n<\/div>\n Argentina\u2019s bonds, stocks and currency are surging after President Javier Milei\u2019s party won an overwhelming victory in a Sunday midterm election, a key requisite to keep economic reforms on track and a United States financial backstop in place. On Monday, international bonds rallied between 9 and 13 cents each, local stocks jumped over 20 percent […]<\/p>\n","protected":false},"author":1,"featured_media":274,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":["post-273","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-latin-america-news"],"_links":{"self":[{"href":"https:\/\/inernews.online\/index.php?rest_route=\/wp\/v2\/posts\/273","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/inernews.online\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/inernews.online\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/inernews.online\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/inernews.online\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=273"}],"version-history":[{"count":0,"href":"https:\/\/inernews.online\/index.php?rest_route=\/wp\/v2\/posts\/273\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/inernews.online\/index.php?rest_route=\/wp\/v2\/media\/274"}],"wp:attachment":[{"href":"https:\/\/inernews.online\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=273"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/inernews.online\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=273"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/inernews.online\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=273"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Recommended Stories <\/h2>\n
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