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