FX.co ★ Merval Soars After Midterm Elections

Argentina's Merval index climbed above 2,400,000, revisiting heights last seen in March, following the October 26th midterm elections. These elections granted approximately 41% of the vote to President Milei's coalition. This outcome significantly enhanced his legislative influence, increasing the chances of credible fiscal consolidation, privatizations, and deregulation. Consequently, the yield premium on Argentine risk was lowered. Additionally, an announced support package from the United States, including a signed $20 billion currency swap and supplementary financing, provided instant external liquidity, narrowed sovereign spreads, and alleviated refinancing pressures. This situation enabled investors and international funds to reallocate capital into substantial, liquid domestic stocks. These combined developments increased the present value of regulated cash flow sectors and banking franchises, prompting a shift towards energy, utilities, and financial institutions. This shift was further bolstered by analyst upgrades and improved bank earnings and credit growth forecasts.