LGIM: Commentary on Argentinian election results

LGIM: Commentary on Argentinian election results

Opkomende markten Politiek
Argentinië vlag

Uday Patnaik, Head of Emerging Market Debt at Legal & General Investment Management (LGIM) said:

“The consensus was that Alberto Fernandez would win in the first round, which he did.  Alberto Fernandez is set to be sworn in on December 10.”

“Fernandez gathered 48% of the votes while Macri had about 40.5%. If there was a surprise, it was that Marci performed better than expected.  The gap narrowed to 7.5%, which was a significant improvement for Macri versus the PASO.”

“Fernandez’s initial speech was perceived as moderate.  Also, Marci and Fernandez are apparently meeting today (Monday) to begin the transition, which is clearly a positive.  The City of Buenos Aires was won by Laretta, which is also a positive as it provides an offset to Kicillof, the new governor of the Province of Buenos Aires (and the Junto por el Cambio also managed to win several other provinces including Cordoba, Santa Fe, and Mendoza).  Though Fernandez still controls the Senate, there is close to an even split of Congress.  With a better than expected showing of Cambiemos there does appear to be some checks and balances in place which could be a force for potential moderation in policy.”

“Argentina also tightened capital controls late Sunday (27 October) after Fernandez won the elections.  $200/month is the maximum allowed to be purchased via bank accounts compared to $10,000/month previously.  Again, this should not be seen as a surprise post-elections.”

“The market will now immediately focus on Fernandez cabinet appointments and the direction of the IMF talks.  Local media are reporting that Fernandez will announce an economic transition team later today (Monday).”