NEW YORK (Reuters) -Early results in Argentina’s legislative elections on Sunday showed a victory for President Javier Milei as voters strongly backed his free-market reforms and deep austerity measures, providing a strong boost for the libertarian leader to continue his economic overhaul.
The president’s party, La Libertad Avanza, took 41.5% of the vote in Buenos Aires province compared with 40.8% for the Peronist coalition, according to official results. The province has long been a political stronghold for the Peronists and the election marked a dramatic political shift.
COMMENTS:
KARL SCHAMOTTA, CHIEF MARKET STRATEGIST, CORPAY, TORONTO
“This evening’s unexpectedly strong performance for Milei’s La Libertad Avanza should see the peso rally when spot markets reopen and smooth the way for more comprehensive economic reforms in the months ahead. U.S. Treasury Secretary Scott Bessent’s bet on Argentina could look a little less terrible by tomorrow morning.”
“Milei’s victory should insulate him against veto overrides and impeachment processes for now, but plunging approval ratings mean he could face difficulty in finding coalition partners to pass some of the most controversial planks of his agenda. Structural contradictions in the (Argentine) economy will continue to frustrate peso bulls for a long time to come.”
ALEJO CZERWONKO, CIO FOR EMERGING MARKETS AMERICAS, UBS GLOBAL WEALTH MANAGEMENT
“The scale of Milei’s victory ranks at the most optimistic end of pre-election expectations. His party now holds the political capital needed to accelerate structural reforms. Milei is now able to move forward with an ambitious deregulation agenda, pursue labor, tax, and potentially social security reforms in Congress, and implement changes to Argentina’s FX regime.”
“From a financial markets perspective, this electoral outcome was far from priced in. Ahead of the vote, Argentina’s “country risk” – the spread its U.S. dollar sovereign bonds pay over U.S. Treasuries – was at distressed levels, as investors were extrapolating Milei’s weak performance in September’s Buenos Aires province election. With this result, Argentine risk assets should now benefit from greater political stability, a renewed push for pro-market reforms, and robust support from the U.S.”
BRIAN JACOBSEN, CHIEF ECONOMIST, ANNEX WEALTH MANAGEMENT
“It was a surprisingly strong endorsement of Milei’s policies. It’s reasonable to expect that we could see an ‘everything rally’ given the resolution of the uncertainty. I’m expecting to see a return of the price levels on bonds to the pre-September levels if not better.”
“The currency is still overvalued, but this result could encourage policymakers to continue to move the trading band to allow the currency to depreciate.”
“This election result keeps the country in the ‘nice’ column of President Trump’s ‘naughty and nice list.’ The bulls can charge ahead.”
MARC CHANDLER, CHIEF MARKET STRATEGIST, BANNOCKBURN CAPITAL MARKETS, NEW YORK
“Results appear to be well better for Milei than expected … still hard choices lie ahead.”
“Alongside U.S.-China seemingly moving away from the brink, and trade deals or frameworks with four east Asian countries, risk-on sentiment has been fanned.”
BENJAMIN GEDAN, SENIOR FELLOW AND DIRECTOR OF THE LATIN AMERICA PROGRAM, THE STIMSON CENTER
“The result was impressive, and hugely significant for Milei’s pro-market project.”
“Up until now, Milei had mostly governed by executive order. That gave investors little reason to believe his policies would not be quickly reversed by a Peronist down the road.”
“In recent weeks, the Congress was challenging Milei’s fiscal adjustment.”
“Now, Milei has a shot at tackling the deep structural dysfunction that long clipped Argentina’s wings, including its tax and pension systems and labor code.”
“It could still be a hard slog, unless the economy turns around quickly. But at least he’ll have a chance.”
(Compiled by Saqib Iqbal Ahmed)
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