On Tuesday, Argentina’s stock market responded positively to the decisive victory of libertarian candidate Javier Milei, despite the nation being in a state of uncertainty over the potential changes that the self-proclaimed “anarcho-capitalist” may introduce.
Milei, a 53-year-old economist, promised to eliminate various government departments and even used a chainsaw as a prop during campaigning. As a result, Argentina’s longstanding Peronist coalition suffered a defeat as voters expressed their dissatisfaction with the government’s decades of economic downturn.
The economy of Latin America’s third-largest country is struggling with a yearly inflation rate of 143%.
The day after the election, which was Monday, was observed as a national holiday in Argentina which caused a delay in the market’s response. However, when the stock market opened on Tuesday, it initially saw a 20% increase before settling to a gain of approximately 14%.
The Argentine peso is heavily regulated and the unofficial “blue dollar” exchange rate, which is considered a gauge of fear in the country, responded calmly by increasing slightly to 1,050 pesos per dollar.
Milei has promised to abandon the peso in favor of the US dollar and close the central bank, which he claims is excessively printing money to fund government overspending, in an attempt to curb inflation.
During his election campaign, he stated that he planned to significantly reduce state expenditures and eliminate approximately 10 government departments, along with other contentious suggestions.
Nevertheless, he eventually moderated some of his language, causing significant doubt about his true intentions.
During his initial interviews on Monday following the election, Milei cautioned that it could potentially take two years to control inflation and outlined his proposals for restructuring the government.
Milei stated that all assets that are able to be owned by private companies will ultimately end up in their hands. This includes entities such as the state-owned oil company YPF and state-controlled media.
Milei’s comments sparked a 34% increase in the shares of Argentina’s state oil company, YPF, driving the rise of the country’s stock market.
YPF’s shares on Wall Street experienced a 40% increase at the end of trading on Monday.
On Monday, Milei met with current President Alberto Fernandez to discuss the transition process before his inauguration on December 10.