Milei Victory Sends Argentine Stocks Up Almost 50%
ADRs surged nearly 50%, led by Grupo Supervielle (+47%), BBVA (+42%), Grupo Financiero Galicia (+39%), and Transportadora de Gas del Sur.
Quick overview
- The election outcome has strengthened the ruling coalition, enhancing expectations for significant reforms in Argentina.
- Argentine stocks and bonds have surged, with some assets seeing gains of up to 50% following the election results.
- Investors are optimistic about the government's ability to implement structural reforms, which could lead to a decrease in country risk.
- President Javier Milei's decisive victory positions his party favorably for negotiating key legislative changes.
The surprising election outcome has fueled expectations of sweeping reforms, leaving the ruling coalition stronger in Congress and boosting investor appetite for Argentine assets.
Argentine stocks and bonds are soaring as much as 50% on Monday in Wall Street trading, while the S&P Merval logged its biggest gain in 30 years following the stunning performance of La Libertad Avanza in the general elections. The ruling party secured more than 40% of the vote, leaving the Peronist opposition around 31%.
Dollar-denominated Global bonds surged as much as 24%, led by the Global 2035, followed by the Global 2041 (+23%) and Global 2038 (+23%), as markets reacted with strong optimism to the decisive public backing of the government. Investors are now looking ahead to a second phase in which economic reforms are implemented. In this context, country risk is expected to fall well below 1,000 basis points.
Analysts see room for the bond rally to extend up to 30%, with spreads potentially converging gradually toward the cycle floor near 550 basis points.
Enthusiasm also spilled over into Argentine equities trading in New York, where ADRs surged nearly 50%, led by Grupo Supervielle (+47%), BBVA (+42%), Grupo Financiero Galicia (+39%), and Transportadora de Gas del Sur (+36%).
In Buenos Aires, the S&P Merval advanced 18% to 2,449,457.73, while its dollar-denominated counterpart jumped 31.1% to 1,737.66 points. The Contado con Liquidación dollar exchange rate plunged 9.7%. Gains were led by Metrogas (+31.2%), Transportadora de Gas del Sur (+30.7%), and Transener (+28.8%).
Market sources noted that domestic assets are rallying on expectations that the renewed electoral support for President Javier Milei will allow him to push through structural reforms that could sustainably improve valuations under a more favorable economic outlook.
Market reaction to Milei’s victory
- The scale of Milei’s victory sits at the most optimistic end of pre-election expectations.
- His party now holds the political capital needed to accelerate structural reforms.
- The results should help dispel concerns over whether Argentina will continue receiving crucial support from the United States.
- Prior to the election, the Trump administration signed a $20 billion swap line and is discussing an additional $20 billion financing package with a group of banks.
- Milei and his party emerged as clear winners with a renewed mandate.
- With this outcome, governors and lawmakers should be more willing to work with Milei under the right conditions, opening the door for reform.
- The decisive victory leaves Milei’s party in a strong negotiating position to secure approval for key legislative changes.
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