NEW YORK, Oct 13 (Reuters) – Argentina’s looming elections are the main risk to bullish market bets as a wave of U.S. financial support for President Javier Milei’s libertarian economic policies does not guarantee that voters will back his minority party, investors say.
Milei’s right-wing politics have endeared him to President Donald Trump’s administration, while his spending cuts and focus on inflation have given investors some of the best returns among emerging markets since he took power in December 2023.
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But recent electoral setbacks for Milei’s party, fueled by corruption allegations reaching his inner circle, have hurt the leader’s popularity, a key indicator for investors, hammering the peso and government bonds.
His La Libertad Avanza party wants to increase its seats in both chambers in the October 26 vote so that he can advance his austerity and free-market overhauls of South America’s second-largest economy, which has a history of defaults and other financial crises.
FEARS THAT U.S. LIFELINE WILL END
Argentine assets rallied on Thursday, ahead of a Friday market holiday, after the U.S. Treasury bought an undisclosed amount of pesos on the open market and completed a $20 billion swap framework with Argentina’s central bank. On Friday, international bonds gave back a fraction of Thursday’s gains, as did stocks traded on U.S. exchanges.
With the U.S. lifeline easing some of the market pressure, the focus on the midterm election intensifies.
Argentina’s bullish investor bets face midterm election risk despite US backing
