The first words of the next president of Argentina, Javier Milei, to the press have had immediate effects on the financial market. The far-right has said that he will privatize the state-majority oil company YPF and the shares of this and other Argentine companies have begun to fly on Wall Street. “Everything that can be in the hands of the private sector is going to be in the hands of the private sector,” he said on Monday morning when talking about the privatization of the oil company and public organizations.
The most notable rise is precisely that of YPF, which rose 36%, 40 minutes after opening operations. Other companies listed on the New York Stock Exchange have followed, such as Transportadora Gas del Sur, which also has a strong increase of 22%, and Pampa Energía rose 7%. In the banking sector, the shares of Grupo Financiero Galicia are flying, registering a rise of 23%; Banco Macro, with an increase of 19%; Cresud, 21%, BBVA Argentina, 16%; Supervielle Group, 12%.
The triumph of the ultraliberal economist has also boosted the price of sovereign bonds. The dollar-denominated bond listed on the New York Stock Exchange and serves as the main reference for Argentine fixed income, the Global30, rose 4.38% this morning, reports Bloomberg. It should be noted that this Monday the 20th is a holiday in Argentina for Sovereignty Day and that is why the Buenos Aires Stock Exchange is inactive.
In addition to stocks and bonds, on Sunday night, a few hours after Milei’s election, movements were observed in the crypto dollar. The jump to around 1,240 pesos per free dollar in the crypto market, which operates 24 hours a day, seven days a week, was the first palpable reaction from the financial sector after 8 pm on Sunday. This Monday it is at 1,010 pesos per dollar.
In the midst of a suffocating economic crisis, Milei came to the presidency with a proposal for dollarization and the elimination of the Central Bank, in addition to a reduction in social aid and slimming down the State. The expectation is now placed on what happens with the stock market dollar, which in recent weeks has been trading close to 900 pesos.
“Milei faces extreme challenges with highly uncertain outcomes,” Jaime Reusche, a credit risk analyst at Moody’s, wrote Monday morning, “although he proposed strong measures during his campaign that could eventually address the strong imbalances currently paralyzing the economic activity in Argentina, distort relative prices and reduce purchasing power, these measures, if enacted as described, would cause an abrupt and profound economic adjustment, collapsing domestic demand and threatening financial stability. A divided Congress and social pressures will also influence the incoming president’s ability to implement corrective policies.”
The electoral result was due to the marked difference of 11 percentage points that Milei achieved, wrote stock analysts from the firm Credicorp Capital, based in Bogotá, in their report to clients on Monday. “Although Milei’s victory implies a radical change in the approach to economic policy, it is important to recognize that the economic and governance challenges are considerable, suggesting that uncertainty is likely to remain high,” the specialists said. .
“The success of the future Administration will depend on the willingness of the population and the political establishment to support measures that, in some cases, may be considered radical, such as the proposal for dollarization and fiscal adjustment,” Credicorp added.
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