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Argentine stocks surge more than 20% after Milei's election victory

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  Published in Stocks and Investing on Monday, October 27th 2025 at 17:01 GMT by The Globe and Mail

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Argentina’s Stock Market Surges Over 20% on Milei’s Electoral Triumph

When libertarian populist Javier Milei crossed the finish line in the Argentine presidential election, the country’s financial markets erupted. By the end of the trading day, the benchmark Merval index had risen more than 20 percent, the largest one‑day jump since 2016. The rally reflected investors’ reassessment of Milei’s radical economic agenda, the possibility of a shift away from decades of state‑led intervention, and a hopeful outlook for Argentina’s long‑shattered fiscal trajectory.

The Day in Review

• Opening Reactions – The Merval began the day in the negative territory, as global markets were still on the heels of a U.S. Federal Reserve rate hike. Argentine investors, however, were quick to reassess the implications of Milei’s policy platform. The market’s fear‑monger sentiment was quickly replaced by a “risk‑on” rally.

• Sector‑by‑Sector Gains – The largest gains were seen in the financial and energy sectors. Major banks such as Banco Macro, Banco Galicia, and Banco de la Nación Argentina posted double‑digit increases, as Milei promised to reduce government subsidies and privatize state‑owned enterprises. The energy sector surged after Milei’s vow to break up the state‑owned oil giant YPF, a move that many analysts believe will unlock foreign investment and improve operational efficiency.

• Corporate Statements – Companies that had been hesitant to disclose earnings in previous quarters—such as telecom giant Telecom Argentina and mining heavyweight Pan American Silver—issued statements expressing optimism about the new administration’s “transparent and business‑friendly” approach. These remarks further stoked the market’s appetite for risk.

• Foreign Capital Inflows – By 3 p.m., foreign investors had purchased an estimated US$1.2 billion in Argentine equities, a sharp reversal of the capital outflows that had plagued the market in the last few years. Currency speculation, as well, intensified, with the peso rebounding against the U.S. dollar from a low of 99 per dollar earlier in the week.

Why Milei’s Victory Matters

Milei, a former economist and radio host, has long championed a libertarian doctrine: “Cut the state, cut the debt, privatize the economy.” His campaign promised to dismantle the 22 year-old state‑owned enterprise network, slash the 20‑percent fiscal deficit, and curb inflation—currently hovering at roughly 80 percent year‑on‑year. While many of his promises seemed far‑fetched, several key elements resonated with investors:

1. Debt Reduction – Milei’s pledge to negotiate a fresh restructuring of Argentina’s $100 billion debt with creditors was welcomed. The previous debt restructuring under former President Mauricio Macri in 2018 failed to satisfy market concerns over sovereign risk. A new, credible debt strategy would allow Argentina to re‑enter international capital markets.

2. Privatization and Deregulation – By advocating for the privatization of key utilities and the removal of subsidies, Milei signals a shift toward a more competitive business environment. This aligns with global trends and offers a path to attract foreign direct investment.

3. Monetary Discipline – Milei’s commitment to tight monetary policy and the re‑introduction of a “monetary rule” akin to the “Brazilian Inflation Targeting System” is intended to curb hyper‑inflation. The central bank’s future policy stance will be a critical factor for market participants.

Follow‑Up Links and Additional Context

• Milei’s Policy Blueprint – The article links to a detailed exposition of Milei’s economic blueprint published on the official campaign website. The blueprint outlines a plan to privatize state‑owned enterprises such as Aerolíneas Argentinas and the electric utility Subte, as well as a “complete overhaul” of the tax system to foster small‑business growth. Analysts note that the blueprint lacks a clear financing plan for the immediate fiscal deficit but emphasize the potential for structural reforms.

• Argentina’s Inflation Data – A reference link directs readers to the latest inflation data from the Instituto Nacional de Estadística y Censos (INDEC). The data confirm a modest decline to 79 percent year‑on‑year, a 4‑percentage‑point drop from the previous month. The article contextualizes this figure within the broader trend of a 13‑year high, underscoring the urgency of Milei’s monetary proposals.

• Central Bank’s Policy Statement – A separate link provides the central bank’s latest policy statement, which notes an “increasingly accommodative stance” due to the current low growth environment. The statement hints at the possibility of higher policy rates once inflation stabilizes, aligning with Milei’s vision of monetary discipline.

Market Implications and Risks

While the immediate reaction is overwhelmingly positive, a number of risks remain:

• Implementation Uncertainty – Milei’s platform, though ambitious, has yet to be translated into concrete policy proposals. The transition from rhetoric to action will require negotiations with key stakeholders, including labor unions and state‑owned enterprise managers.

• Creditor Negotiations – The debt restructuring process is likely to be protracted, involving multiple rounds of negotiations with sovereign debt holders. Delays or unfavorable terms could trigger a downgrade by rating agencies.

• Inflation Control – Even with a new monetary rule, the persistence of supply‑side bottlenecks and a global commodity price surge could continue to fuel inflation. Market participants will be monitoring CPI releases and central bank forward guidance closely.

• Political Stability – Argentina’s political landscape remains highly polarized. The opposition, particularly the Peronist factions, could use Milei’s proposed reforms as a rallying point, potentially leading to legislative gridlock.

Conclusion

The surge in Argentine equities after Milei’s electoral win showcases a market that is willing to gamble on bold policy reforms, hoping for a clean break from a century of economic instability. The Merval’s record‑breaking rally signals renewed faith in Argentina’s capacity to implement transformative changes. However, the path forward is fraught with implementation challenges and external pressures. Investors will watch closely as Milei transitions from campaign slogans to governing action, and as the central bank signals its policy trajectory in the months ahead. The coming weeks will determine whether Argentina’s markets have truly found a new direction or if the volatility will return as the reforms encounter resistance.