This Is What Markets Will Be Honing in on During and After Argentina’s Primaries

The outcome of the primary elections this Sunday will keep both long-term investors and traders on edge. What uncertainties remain and where will the market be focusing?

This Is What Markets Will Be Honing in on During and After Argentina’s Primaries
August 11, 2023 | 03:00 AM

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Buenos Aires — Argentina’s electoral race will formally commence this Sunday, August 13, when more than 15 million citizens head to the polls for the Primary, Open, Simultaneous, and Obligatory Elections (PASO, in Spanish), a crucial stage that will determine which candidates will advance to compete for the presidency in the October general elections.

Four years after Alberto Fernández’s overwhelming victory in 2019 —which triggered the world’s second-largest ever stock market crash and the peso’s collapse—, the election outcome will keep investors and traders on edge.

Given this scenario, the Argentine market is attempting to anticipate and find any indications that can infer the result. In this pursuit, certain certainties emerge along with a few uncertainties that must be closely watched when interpreting the results on Sunday.

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Key Points to Watch this Sunday

A recent report from 1816, currently one of the most influential consultancies in Buenos Aires, focused precisely on the main doubts that remain ahead of the PASO elections: the margin of victory for the opposition coalition Juntos por el Cambio (JxC) ahead of the government’s Unión por la Patria (UxP); who will be the winner within the JxC primary; and how many votes Libertarian outsider Javier Milei will muster.


Regarding the difference between JxC and UxP, 1816 Consulting deemed it “the main mystery to be unveiled”, noting that the greater the margin of victory for JxC, the more Argentine assets should rise on Monday.

The second most relevant uncertainty, they assessed, is who will win the Juntos por el Cambio primary. In this regard, they highlighted that Patricia Bullrich and Horacio Rodríguez Larreta both agree on the need for a fiscal shock policies in 2024, but differ in the speed with which they would lift currency controls, with Bullrich opting for a quicker exit and Rodríguez Larreta proposing a more gradual approach.

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After assessing the risks associated with both proposals, they concluded that for peso-denominated debt, “the best scenario is (for Larreta to win) since removing the controls very quickly and immediately reforming the Central Bank’s Organic Charter may not be compatible with the current stock of sovereign debt in pesos.”


As for dollar-denominated debt, they expressed that they’re not clear about what the ideal scenario would be. Nonetheless, they did emphasize that due to the current maturity profile, either candidate’s “economic plan should allow [Argentina] to regain access to the international market no later than 12 months after the new Government takes office.”

In addition to the winner, 1816′s report also pointed out that “on Sunday night, analysts will begin to look at the primary winner’s ability to retain the loser’s votes.” They recalled that the clashes between Larreta and Bullrich have toned down in recent weeks, as they decided to await for official results together at a shared a campaign center this Sunday.

Uncertainty Around Javier Milei

The third main point of uncertainty, according to 1816, is how many votes Javier Milei will muster. While acknowledging that he is a “pro-market figure,” he is viewed cautiously by investors due to uncertainties surrounding the implementation of his plan.

Milei insisted recently that his plan to dollarize the Argentine economy is “absolutely feasible.”


“The actual number of votes for Javier Milei is one of the key things to watch on Sunday,” echoed the brokerage firm Facimex Valores in a recent report, where they also noted that “another key aspect to observe regarding the opposition will be the national internal competition within Juntos por el Cambio.” In this regard, they mentioned that “resolving this internal contest will be crucial in envisioning scenarios for the general election, given the contrast between Bullrich and Rodríguez Larreta.”

Furthermore, both 1816′s analysts and those of Facimex also pointed out that monitoring the voter turnout levels will be important (given that turnout is typically lower in the PASO than in October), the outcome in the Province of Buenos Aires, and the future composition of Congress.

“In the race for control of Congress, Unión por la Patria assumes the highest risks in the Chamber of Deputies, while Juntos por el Cambio is the party that risks the most in the Senate,” stated Facimex’s report. They added, “It seems unlikely that there could be significant changes in the power dynamics within Congress or that any party could have a quorum on their own in either chamber.”