Javier Milei lifts a giant replica of a $100 bill with his face in the center during his campaign wrap-up November 16 in Cordoba, Argentina.Nicolas Aguilera (AP)
The first words of Argentina’s next president, Javier Milei, to the press had an immediate impact on the financial market. The right-wing extremist has said he will privatize the majority state-owned oil company YPF, and shares of that and other Argentine companies have soared on Wall Street. “Everything that can fall into the hands of the private sector will also be in the hands of the private sector,” he said on Monday morning while discussing the privatization of the oil major and public organizations.
The most notable increase is precisely that of YPF, which increased by 36% 40 minutes after opening operations. This was followed by other New York Stock Exchange-listed companies such as Transportadora Gas del Sur, which also recorded a strong increase of 22%, and Pampa Energía rose by 7%. In the banking sector, shares in Grupo Financiero Galicia are booming, recording an increase of 23%; Banco Macro, up 19%; Cresud, 21%, BBVA Argentina, 16%; Supervielle group, 12%.
The triumph of the ultra-liberal economist has also driven up the price of government bonds. The dollar-denominated bond listed on the New York Stock Exchange and used as the main benchmark for Argentine bonds, the Global30, rose 4.38% this morning, Bloomberg reports. It should be noted that this Monday the 20th is a Sovereignty Day holiday in Argentina and the Buenos Aires Stock Exchange is therefore inactive.
In addition to stocks and bonds, movements in the crypto dollar were also observed on Sunday night, a few hours after Milei’s election. 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 noticeable reaction from the financial sector after 8 p.m. on Sunday. This Monday it is at 1,010 pesos per dollar.
Amid a crushing economic crisis, Milei came to the presidency with a proposal for dollarization and the abolition of the central bank, in addition to cutting welfare and streamlining the state. Now what will happen to the stock exchange dollar, which has been trading at almost 900 pesos in recent weeks, is awaited.
“Milei faces extreme challenges with highly uncertain outcomes,” wrote Jaime Reusche, credit risk analyst at Moody’s, on Monday morning, “despite the fact that during his election campaign he proposed strong measures that could ultimately address the severe imbalances that are currently crippling economic activity in Argentina. “Distort.” By driving down relative prices and reducing purchasing power, these measures, if implemented as described, would lead to an abrupt and profound economic adjustment, collapsing domestic demand and endangering financial stability. A divided Congress and social pressures will also impact the new president’s ability to implement corrective measures.”
The election result was due to the significant difference of 11 percentage points that Milei achieved, wrote stock analysts from Bogotá-based Credicorp Capital in their client report on Monday. “Although Milei’s victory represents a radical shift in the approach to economic policy, it is important to recognize that the economic and managerial challenges are significant, suggesting that uncertainty is likely to remain high,” the experts said.
“The success of the future government will depend on the willingness of the population and the political establishment to support measures that in some cases can be seen as radical, such as the dollarization and fiscal adjustment proposals,” Credicorp added.