SAO PAULO: Argentina’s stocks, bonds and currency jumped on Monday as investors bet a strong electoral performance from President Mauricio Macri’s coalition could boost his reform agenda.
While “Let’s Change” will remain a minority in the lower house of Congress and the Senate, as expected, its defeat of populist former President Cristina Fernandez in the Senate race in populous Buenos Aires province and strong performance nationwide should help in negotiations with opposition lawmakers, analysts said.
Investors expect that momentum will help it pass its 2018 budget, which aims to cut the fiscal deficit by one percentage point to 3.2 percent of gross domestic product, along with tax, labor and capital markets reforms.
“A very solid electoral performance by President Macri, which should endow the administration with a stronger mandate to purse his reformist agenda,” Goldman Sachs economist Alberto Ramos wrote in a report.
“The strong showing by President Macri increases the probability of a reelection in 2019, giving continuity to the current market and investment-friendly set of policies.”
Argentina’s benchmark Merval index rose 1.9 percent to new all-time highs, while the peso firmed 0.9 percent. Dollar bonds jumped 1.8 percent.
Brazilian markets, however, slipped as investors avoided risky bets ahead of a widely-expected vote in the lower house of Congress on whether to put President Michel Temer on trial before the Supreme Court for corruption charges.
Traders see Temer dodging the charges but the vote may corrode his political capital, potentially delaying the implementation of a plan to streamline the pensions system seen as key to boosting long-term growth.
Common shares in phone carrier Oi SA, which are not part of the benchmark index, slumped 4 percent after regulators rejected a proposal to swap billion of reais in regulatory fines for new investments as part of its debt reorganization plan.
Source: Brecorder.com
