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Milei’s Election Win Fuels Major Gains in Argentine ADRs, ETFs: ‘There Is No Free Lunch,’ Analysts Say

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Javier Milei‘s victory in Argentina’s presidential election sparked a rally in Argentine ADRs trading on major U.S. stock exchanges.

Far-right Milei won by a significant margin of over 11% against center-left candidate and current Finance Minister Sergio Massa, heralding a major shift in Argentina’s political landscape.

Milei is set to succeed President Alberto Fernandez, known for his leftist leanings and alliance with Christina Kirchner.

Markets Welcome Milei’s Victory

Investor optimism about Milei’s potential impact on the Argentine economy was exceptionally strong in the premarket trading on Monday.

The Global X MSCI Argentina ETF (NYSE:ARGT), the sole ETF available to U.S.-based investors focusing on Argentine equities, witnessed a 13% rise, marking its most robust performance since its inception in 2012.

The energy sector, particularly YPF Sociedad Anonima (NYSE:YPF), is among the top gainers. YPF’s shares soared by 24% in the premarket, a record not seen since March 2009. In the financial sector, major players Banco Macro S.A. (NYSE:BMA) and Grupo Financiero Galicia S.A. (NASDAQ:GGAL) each recorded a 16% increase.

Milei’s first remarks as president-elect, emphasizing Argentina’s critical situation and the need for reconstruction, have further fueled investor interest.

Argentina’s struggle with hyperinflation, marked by a monthly inflation rate of 8.3% and an annual rate of 142% as of October 2023, underscores the urgency of economic reforms.

During his political campaign, Milei has been a vocal proponent of drastic measures such as the closure of the central bank, dollarization of the economy, reducing public spending, and eliminating stringent trade and capital controls. These proposals, while ambitious, signal a potential overhaul of Argentina’s economic policy.

Milei has expressed his intention to privatize YPF along with other publicly-held companies, including the national television network. Additionally, the President-elect plans to visit the United States and Israel before taking office in December.

In August, Argentina received a disbursement of approximately US$7.5 billion from the International Monetary Fund (IMF). This infusion increased the total amount disbursed under the existing Extended Fund Facility (EFF) to around US$36 billion. The IMF has…

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