2023-11-20 15:54:27 ET
U.S.-listed shares of Argentinian companies jumped on Monday, after far-right libertarian Javier Milei won the country's presidential election over the weekend.
Argentina's markets were closed for a local holiday. But the Global X MSCI Argentina ETF ( NYSEARCA: ARGT ) jumped as much as 13.2% for its best intraday performance ever.
The South American nation has been struggling with triple digit inflation, a high poverty rate, and repeated debt crisis.
Milei's victory capped a campaign in which the outsider radical has often held up a chainsaw at rallies to indicate his intentions in slashing public spending. Milei has also said he would "burn down" the central bank and dollarize the economy. At his victory speech on Sunday, the libertarian said that the country needed "drastic" changes.
"Argentina’s president elect Javier Milei faces extreme policy challenges with highly uncertain results," Jaime Reusche, the lead analyst for Argentina’s sovereign rating at Moody's Investors Service, told Seeking Alpha in an emailed statement.
"While (Milei) proposed forceful measures during the campaign, which could over time address the stark imbalances that currently cripple Argentina’s economic activity, distort relative prices and reduce purchasing power, these measures if enacted as outlined during the election campaign would cause an abrupt and profound economic adjustment, collapsing domestic demand and threatening financial stability,” Reusche added.
Nevertheless, investors appeared to see Milei's promises to cut spending as a positive. American depositary shares of several Argentinian companies jumped on Monday, with the biggest gain seen in state-owned energy firm YPF ( YPF ).
Meanwhile, U.S.-listed shares of Telecom Argentina ( TEO ) were up 20.8% and Pampa Energia ( PAM ) were up 16.8% . Banks were also higher, with Grupo Supervielle ( SUPV ) up 24.2% , Banco Macro ( BMA ) up 21.1% , Banco BBVA Argentina ( BBAR ) up 19.8% and Grupo Financiero Galicia ( GGAL ) up 17.5% .
Kristalina Georgieva, the managing director of the International Monetary Fund (IMF), congratulated Milei on X (formerly Twitter). The IMF back in March 2022 approved a $44B loan to the country.
"We look forward to working closely with him and his administration in the period ahead to develop and implement a strong plan to safeguard macroeconomic stability and strengthen inclusive growth for all Argentinians," Georgieva said.
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U.S.-listed Argentinian stocks rip big gains after Javier Milei's presidential win