Shares and exchange rates rise as market reacts to Javier Milei’s landslide victory

The market saluted the ‘pro-market’ president and braced for a steep devaluation of the peso

The markets are showing their first reactions to far-right economist Javier Milei’s victory in Sunday’s presidential elections as all US dollar exchange rates and Argentine shares went up on Monday and Tuesday.

The S&P Merval — Buenos Aires Stock Exchange’s main index — rose 17.8% on Tuesday. (Monday was a banking holiday in Argentina so the market was closed). Meanwhile, shares of most Argentine companies on Wall Street went down, albeit after soaring on Monday.

That day, the American Depositary Receipts (ADRs) of the state-operated YPF oil company rose more than 40% on Wall Street. On Tuesday, YPF’s shares increased by 39.2% in the Buenos Aires Stock Exchange.

“It was a great day for markets in Buenos Aires,” Diego Martínez Burzaco, the Country Manager for Galicia Bank’s invest-tech Inviu, told the Herald. He added that stocks had seen average increases of five or seven percent on Wall Street and went up by double digits in Argentina.

“It was a very good stock exchange trading session, one of the best in history,” he said.

In a press release, Javier Timerman, head of Adcap Grupo Financiero, said that he was surprised by the market euphoria. “I did not think that the market would react that way,” he said.

Timerman added that Wall Street never supported the current administration’s economic model and that it could have been predicted that the New York Stock Exchange would react positively to Milei’s victory as a result.

According to Pablo Repetto, head of research at brokerage firm Aurum, two main factors for the rally are the potential for lower intervention from the state under Milei’s upcoming presidency and political support from the more moderate opposition coalition Juntos por el Cambio.

“[The shares] returned to values like those seen in the run-up to the primaries,” Repetto told the Herald. “It is as if the expectations that investors had at that time [when they expected a JxC win] have materialized now, but with different actors.”

Dollar rising

On Tuesday, the official retail dollar was up by AR$2 compared to Friday at AR$371.5. The blue-chip swap rate rose by 0.6% to AR$881.8, while the MEP dollar was up 5.3% and closed at AR$919.21.

The informal exchange rate, or “blue dollar,” increased by 13.1% to AR$1075.

“It is difficult to imagine an increase in the demand for pesos in this context,” Repetto said. He said the low demand for the Argentine currency was caused by Milei’s dollarization proposal and the government’s recent monetary issue.

Gustavo Quintana, an analyst and broker for PR Corredores de Cambio, said the so-called parallel exchange rates rose “probably as an effect of the tendency to dollarize portfolios due to expectations of a steep change in the official exchange rate in the last month of the year.”

“The blue [dollar] traded very little as a consequence of [government] surveillance operations and threats of inspections,” Quintana added. “So prices for me were only a number.”

According to Quintana, since Milei still hasn’t announced his economic cabinet or how (or if) he would finally dollarize the economy, the market’s expectations are not completely clear.

The Economy Ministry carried out a scheduled peso security auction on Tuesday. Most of the purchases (52%) were done in dual instruments, paying the highest amount between the inflation rate and the devaluation of the peso against the US dollar. US dollar-linked instruments accounted for 8% of the adjudicated bonds.

End-December future contracts were traded at AR$790, which represented an AR$123 increase compared to Friday, implying that the market is expecting a 119% devaluation at the end of the year.


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