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Why Every Stock in Argentina Soared Monday

By Rich Smith – Sep 13, 2021 at 12:16PM

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Primary voting suggests voters will show Peronists the exit in Argentina.

What happened

Shares of Argentine stocks shot off like fireworks -- in unison -- Monday, as results rolled out in primary voting for the country's upcoming midterm congressional elections.  

As of 9:55 a.m. EDT, shares of electric utility Central Puerto (CEPU -4.08%) are up 15.2% and oil company YPF (YPF -1.43%) is up 9.7%. Argentine regional banks are big winners as well:

  • Grupo Supervielle (SUPV -1.66%) is up 11.3%.
  • Banco BBVA Argentina (BBAR -3.45%) gained 11.5%.
  • Banco Macro (BMA -0.07%) rose 11.6%.
  • And Grupo Financiero Galicia (GGAL 1.11%) is leading the banks higher with a 14.6% gain.
Crowd watching  a fireworks display.

Image source: Getty Images.

So what

Reuters has the story this morning relating how the center-left government of President Alberto Fernandez suffered a rebuke at the hands of voters, who gave 1.2 million fewer votes to congressional Peronists on Sunday than they gave to Fernandez himself in the 2019 presidential election.

Moreover, because voting is mandatory in Argentina, this isn't a story of simple voter apathy -- fewer people voting. It's a story of voters affirmatively choosing to reject the Peronists in favor of more conservative congressional challengers. In the country's most populous region, around Buenos Aires, conservative challengers thumped progressive opponents by a 5 percentage point margin.

Now what

Reuters said the Argentina midterm congressional primaries serve as "a nationwide dress rehearsal ahead of the Nov. 14 midterm ballot, where 127 seats in the Chamber of Deputies are up for grabs out of a total of 257." And if current trends there hold, the government could lose its majority in the Senate as well, helping to "temper the Peronists' more militant wings," the report stated.

"Despite recent signs of an economic recovery and falling coronavirus cases," explained the news agency, "a lengthy recession, rampant inflation and a poverty rate that has risen to 42% have hurt public support for the government." This sets the stage for a change in government in two months, potentially ushering in policies more favorable to investors and the farm sector. It could also smooth the path to Argentina securing financing from the International Monetary Fund, easing access to credit, lowering interest rates, and generally providing a boost to the economy.

No wonder investors are pleased.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Stocks Mentioned

Central Puerto S.A. Stock Quote
Central Puerto S.A.
$5.40 (-4.08%) $0.23
YPF S.A. (ADR) Stock Quote
$8.26 (-1.43%) $0.12
Grupo Financiero Galicia Stock Quote
Grupo Financiero Galicia
$8.22 (1.11%) $0.09
Banco Macro Stock Quote
Banco Macro
$14.24 (-0.07%) $0.01
Grupo Supervielle Stock Quote
Grupo Supervielle
$1.78 (-1.66%) $0.03
Banco BBVA Argentina S.A. Stock Quote
Banco BBVA Argentina S.A.
$3.08 (-3.45%) $0.11

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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