Surprising support for Milei in primaries sows uncertainty in Argentine markets

markets and currency Argentina will face more pressure on Monday after the excellent performance of the ultra-liberal candidate javier mileiwho was the candidate with the most votes in the presidential primaries with his proposals to dollarize the economy and eliminate the central bank.

While Milei had no internal competition in her party Freedom AdvancesSunday’s result provides clear indications about what could happen in the October general elections, since the libertarian economist obtained 30.03% of the votes, according to a provisional scrutiny advanced to 97.4%.

“The market did not expect these data from Milei, I think that the Government will have to be much more attentive to the exchange market, surely it will be a week with a lot of tension”, Dante Sica, an economist at the consultancy Abeceb and former Minister of Production, told Reuters.

In the middle of a deep economic crisis that led to inflation of 116% and poverty of 40%apathy won the majority of Argentines, who showed a higher degree of abstention than in previous elections and turned to a large figure “anti-system” like Miley.

“It is a much more uncertain scenario than expected”said Ricardo Delgado, director of the consulting firm Analytica.

Turnout at the polls on Sunday was 68.5%, eight points less than in the 2019 primariesa fact that worries the entire political system due to the difficulty in attracting voters, annoyed with the traditional parties that are unable to resolve a chronic economic crisis.

In the hard-fought primary of the center-right opposition, the favorite for the presidential elections until Sunday, the former minister Patricia Bullrichwhich represents the most radical wing of the Together for Change coalition, achieved 17% of the vote compared to 11.3% for the mayor of Buenos Aires, Horacio Rodríguez Larreta. The alliance totaled 28.3% of the votes as a whole.

On the other hand, the center-left government coalition, led by the Minister of Economy, Sergio Massaachieved 27.2% of the votes.

“Today we took the first step for the reconstruction of Argentina. Long live freedom, damn it!” shouted on Sunday night before his followers an euphoric mileywho again criticized the caller “political caste”.

The result, considered a massive defeat for the traditional parties, has been unexpected even for political analysts and pollsterswho found it difficult to quantify Milei’s performance.

“It is a politically transversal vote, with emphasis on those under 30 (years), depoliticized and deideologized. A Creole Trumpism”said political analyst Carlos Fara in an opinion column on Monday, referring to the former president of the United States Donald Trump.

“In many popular neighborhoods that have historically voted for Peronism, they opted for Milei. There is fatigue with Peronism and there are no other options that excite us ”, added.

The future president will find himself with a bleak financial panorama: The shortage of foreign currency has left the coffers of the central bank empty and the country has had a debt of US$ 44,000 million for years with the International Monetary Fund (IMF).

In a report prior to the primaries, Goldman Sachs said that Milei creates uncertainty for her policy proposals “radicals”.

“It attracts young, anti-establishment voters, but it does not have a well-established fan base and lacks a broader political platform to support it, unlike more traditional political parties”the investment bank said.

Argentine stocks were trading lower, with the Global X MSCI Argentina ETF falling 4.3% in pre-market operations in USA.

The result could weaken the price of the Argentine peso in the popular parallel markets on Monday and hit bonds, which have risen in recent weeks.

According to most polls, the electoral contest could be defined in a ballot in November, since no candidate seems to be able to reach 45% of the necessary votes -or 40% and a difference of 10 points over his follower- to win the presidency in the first round on October 22.

Reporting by Nicolás Misculin and Eliana Raszewski, with additional reporting by Jorge Otaola and Lucila Sigal Editing by Maximilian Heath.

(With information from Reuters)