The victory of La Libertad Avanza triggered the largest bullish rally in the country's stock market history
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The resounding victory of La Libertad Avanza, the party of President Javier Milei, in the national legislative elections caused a historic reaction in the financial markets.
In just one week, the main Argentine companies listed on the New York Stock Exchange gained 18.657 billion dollars in value, marking the largest bullish rally in the country's stock market history.
According to a report by brokerage firm Balanz, the combined market capitalization of the 15 leading Argentine firms rose from USD 42.356 billion on October 24 to USD 61.013 billion on October 31, representing a 44% increase in just five days.
Javier Milei, presidente de Argentina.
This calculation excluded companies with a regional or global profile, such as Mercado Libre, Globant, and Despegar, to more accurately reflect the performance of companies most closely tied to the domestic economy.
The surge was attributed to the surprise effect of the election result. Analysts and consulting firms had not anticipated such a strong performance by the ruling party, and many investors had adopted a conservative stance after the adverse results for the Milei Government in Buenos Aires province. The unexpected 41% of the votes obtained by La Libertad Avanza changed that outlook and caused a wave of historic optimism among the markets.
“The market seemed to be pricing in a government defeat and an almost 50% probability of a macroeconomic collapse after the election. It was truly a surprise for investors that La Libertad Avanza obtained 41% of the votes. This renews appetite for Argentine risk, and we saw it in the initial days [after the election]”, explained Ezequiel Fernández, director of corporate research at Balanz.
Javier Milei junto a Luis Caputo.
The phenomenon was not limited to ADRs traded on Wall Street. On the Buenos Aires Stock Exchange, where local investors are the main players, the impact was immediate and resounding. The S&P Merval index rose 31.2% in dollars on the Monday following the elections, an unprecedented single-day variation. The momentum continued throughout the rest of the week, leading the Merval to close October with a cumulative monthly gain of 73.3%.
The stock market surge stands as the largest in Argentine market history, surpassing the rallies recorded in November 2023 (36.5%), during the presidential elections, and in April 1999 (34.3%), according to a survey by GMA Capital.
The magnitude of the movement reflects investors' expectations regarding a new economic cycle based on macroeconomic stability, market openness, and the structural reforms that the Milei Government seeks to promote. Although some challenges remain, the general view is that the country is experiencing an unprecedented asset revaluation, driven by a change in the political climate and greater confidence in the Executive's economic program.
