Stocks, bonds rally over Argentine vote-winner’s ‘chainsaw’ change pledges

By Jorgelina do Rosario and Libby George

BUENOS AIRES/LONDON (Reuters) -Far-right libertarian Javier Milei’s strong win in Argentina’s presidential election is boosting bonds and equities but putting downward pressure on the peso currency, investors said on Monday.

The outsider radical, who has pledged to take a chainsaw to public spending, “burn down” the central bank and dollarize the economy, beat Peronist economy chief Sergio Massa in Sunday’s vote, though he struck a measured tone in his first speech as president-elect.

The South American country’s markets are closed on Monday for a local holiday. But its overseas dollar bonds, which largely trade deep in distressed territory near 30 cents on the dollar, rallied more than 2 cents in early trading before retracing some gains, according to MarketAxess data.

Anders Faergemann, co-head of global fixed income with PineBridge Investments, said investors were happy with the outcome, but would proceed cautiously until Milei announced his cabinet.

“We think it’s a positive outcome to markets, but there may be some adjustments in the coming days, the coming weeks … to see what his approach will be,” he said.

JPMorgan, in a note to clients late on Sunday, said it would not change its recommendation on Argentina’s international bonds from its measured “market weight” stance while it awaited clarity on his policy path and ability to enact his plans.

Equities were less measured, with U.S.-listed shares of Argentinian energy company YPF rallying more than 40% after Milei said he would look to privatize it. It cooled to a 33% gain at 1544 GMT.

Banks Grupo Supervielle, Banco Macro, Banco Bbva Argentina and Grupo Financiero Galicia were up between 15.6% and 22.1%, while the $50.8 million Global X MSCI Argentina ETF added 12.2%, hitting its highest since September.

YPF international dollar bonds were also trading 1.5 cents higher.

Milei, who will not take office until Dec. 10, did not refer to “dollarization” in his first speech, raising questions about how quickly he might pursue scrapping the peso entirely.

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