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OPINION AND ANALYSIS | 14-08-2023 13:57

Key takeaways from Argentina’s primary vote surprise

Outsider economist Javier Milei’s surprise win in Argentina’s presidential primaries sent markets tumbling. Here are the key takeaways.

Outsider economist Javier Milei’s surprise win in Argentina’s presidential primaries sent markets tumbling. Here are the key takeaways:

  • The government devalued the official peso rate by 18 percent after suffering a heavy electoral defeat. The central bank also stepped in, raising interest rates by 21 percentage points to 118 percent.
  • Stocks got hammered. The local Merval index was down as much as 14 percent in dollar terms, and a US-traded Argentina ETF plunged the most since March 2020 in heavy trading. Bonds fell as well, particularly in Europe.
  • Milei, who has promised to burn down the Central Bank, took a third of the votes in Sunday’s primary. Hard-liner Patricia Bullrich won the nomination for the main market-friendly opposition bloc, which came in second, trailed by Economy Minister Sergio Massa representing the incumbent Peronists.
  • With a tight three-way race unlikely to be settled in the October 22 vote, investors are bracing for more uncertainty as the election will almost assuredly go to a second round in November.

by Stephen Wicary, Bloomberg

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