Euphoria on Wall Street after Milei’s victory: Argentine stocks rise up to 42% and bonds soar

Most increases for the shares of Argentine companies (Reuters)
Most increases for the shares of Argentine companies (Reuters)

On a day marked by the positive reaction of the markets to the electoral results in Argentina, the American Depositary Receipts (ADRs) of Argentine companies listed on Wall Street experienced a notable rise. This phenomenon reflects the market’s first response to the victory of Javier Miley in the presidential runoff on November 19.

Among the leaders of this upward trend, the 14 hours stands out. jump of 38.12% for the securities of the state-controlled oil company YPF (it jumped 42% during the round), at $14.82. Banking papers also stood out, with gains of up to 24.85% led by Banco Macro.

These stock market movements reflect investors’ perception of the potential impact of Milei’s administration on Argentina’s economic and business climate. The positive response on Wall Street suggests a certain optimism regarding the policies expected from the new government, especially in terms of economic reforms and market opening.

Operations on Wall Street opened at 9:30 a.m. in New York, with a difference of two hours compared to the 11:30 a.m. time in Buenos Aires.

The most liquid dollar sovereign bonds rose in early European trading on Monday, as traders weighed the chances of the dissident changing policies that have the country headed for its sixth recession in a decade with inflation running at 140% annually.

Both sovereign bonds governed by the New York Law and issues submitted to Argentine courts began to show significant increases starting at 8 in the morning, when fixed income businesses began to gain volume. Between the Global bondsthe one who earned the most was the Global 2035 and the one that expires in 2046, with advances of 5.69% each.

In this sense, JP Morgan’s country risk, which measures the rate gap between US Treasury bonds and their emerging peers, fell by 136 units for Argentina, at 2,279 points basics at 2 p.m., a floor since September 20, two months ago.

The elected president, Javier Milei, this November 19, 2023 (Reuters)
The elected president, Javier Milei, this November 19, 2023 (Reuters)

Among the local law bonds, the “Bonares”, the increases were also relevant, the one that gained the most was Bonar 2030 with an advance of 7 percent.

“So far the initial reaction has been very positive in the ADRs, so far quite generally, and the bonds started more moderately but are gaining more momentum,” said the analyst. Gustavo Ber.

“I believe that the reaction is due to the expectation generated by the first signs of the new administration, waiting for details about the cabinet and the urgent comprehensive stabilization plan with which we would seek to correct the serious accumulated imbalances,” added the specialist. .

The country risk hit a floor of 2,337 points, a minimum in two months

With 99% of the votes counted, Milei obtained almost 56% of the support, compared to 44% for the Minister of Economy, Sergio Massa, which represented continuity with the current Peronist government. Polls gave Milei a slight lead in the run-up to the election, so investors thought the strong mandate could make it easier to get his policies approved.

Meanwhile, in the only foreign exchange market that operates during weekends and holidays – the crypto dollarincreases of around 8% were seen in the cost of dollarizing. All in all, it is a moderate movement for a parallel dollar and analysts expect larger movements in the future, at least in the official market.

“One of the biggest challenges of the next administration will be to correct the price distortion that the economy has today,” said Lucio. Garay Mendezfrom the consulting firm EcoGo, to Reuters. “In a context of high inflation (…), the correction is inevitable,” she added.

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