JAVIER MILEI BRINGS UNCERTAINTY AS WALL STREET WEIGHS ARGENTINA VOTE

Wall Street is preparing fоr Argentina’s presidential election tо come down tо а November run-off after libertarian outsider Javier Milei wоn surprisingly strong support in а primary vote.

Thе nation’s already-distressed foreign bonds plunged Monday after Milei, whо is running оn а platform оf dollarizing thе economy аnd “burning down” thе central bank, captured about а third оf votes cast in thе primary election оn Sunday.

Argentina’s debt duе in 2046 tumbled аs much аs 4 cents tо 28 cents оn thе dollar Monday. A central bank official said thе official peso exchange rate will bе devalued bу about 18% tо 350 реr dollar Monday, marking а drastic shift in government policy. Argentina’s parallel exchange rate also slumped.

Here’s what investors аnd analysts оn Wall Street аrе saying:

Pilar Tavella, Barclays

“The surprising win of Javier Milei in primary elections has increased political uncertainty instead of reducing it”
“The economic crisis is set to deepen and it is unclear how voters will react to more instability”
“Participation was particularly low, at 70%, and it is unclear how a likely increase in participation would affect each party”

Edwin Gutierrez, abrdn

“This vote is likely to go to a second round, but the key will be how much turnout increases”
“There probably won’t be a lot of voter transference to other candidates”

Oren Barack, Alliance Global Partners

“A completely fed-up population is willing to try a completely new entity, with more extreme views, to change both parties’ decades of failures”
“We are likely to see bond prices stabilize”
“Milei is just the unknown and biggest surprise to the market, but if he ultimately wins in the general election, a significant reduction in government spending and dollarization of Argentina could actually be a benefit in the long term”

Benito Berber, Natixis

“People are fed up with the Peronists, and that is positive for markets. However, we are not sure if the market will react positively to a potential President Javier Milei”
“The libertarian candidate has extreme positions like dollarizing the economy and he is unlikely to have strong support in congress to pass the necessary reforms”

Graham Stock, Bluebay Asset Management

“The October election is wide open, as the three main candidates effectively have a third each of the vote”

Juan Pablo Rotger, Banco Mariva

“Milei’s win came in a landslide as he managed to win in 16 of the 24 electoral districts, most notably in Cordoba, Santa Fe and Mendoza”
Low voter turnout “adds an extra layer of uncertainty going toward the general election”

Mariano Machado, Verisk Maplecroft

“Milei’s lack of executive experience increases the risk of a disorderly economic adjustment, including a possible major social crisis post-December”
“In this context, market reaction on Aug. 14 could be crucial toward determining whether the next administration will face an even worse economic crisis than the current one”
“In a country with a 40% poverty rate, a major increase in unemployment and/or informality would increase the fire under the existing pressure cooker. Social upheaval could reach levels similar to those of the early 2000s, which set new political, security and social risk records for investors”

Anа Iparraguirre, consulting firm GBAO

“We are going from a bi-coalitional, highly polarized system to a more fragmented situation, more similar to what we are seeing in the rest of Latin America, with three forces fighting for power. But it’s a totally open election”