Argentine Assets Surge After Milei’s Election Victory

Argentine assets soared on Monday after President Javier Milei’s party scored a sweeping victory in Sunday’s midterm elections — a result seen as crucial for keeping his economic reform agenda on track and securing continued U.S. financial support.

International bonds jumped by 10 to 15 cents, local stocks surged more than 20%, and the peso strengthened over 10% against the dollar — marking one of its strongest sessions on record.

Official results from Sunday’s legislative vote showed that voters overwhelmingly backed Milei’s free-market reforms and tough austerity measures, as inflation has sharply declined since he took office nearly two years ago.

The strong showing followed Washington’s pledge to provide Milei’s government with up to $40 billion — including a $20 billion central bank swap line and a potential $20 billion loan facility — conditional on progress with economic reforms.

“The victory was far bigger than anyone expected,” said Thierry Larose, portfolio manager at Vontobel Asset Management. “He was fighting for political survival before — now he’s in a powerful position to build tactical alliances and advance reforms that once seemed out of reach.”

Milei’s Party Leads Across Key Battlegrounds

According to official results, Milei’s La Libertad Avanza (LLA) secured 41.5% of the vote in Buenos Aires province, compared with 40.8% for the opposition Peronist coalition — a significant political shift in a region long considered a Peronist stronghold. Nationally, LLA won just over 40% of the vote, far exceeding expectations.

“Milei’s victory speech was notably conciliatory and cooperative, signaling a willingness to work with non-LLA legislators on reforms,” wrote Christine Reed, an emerging-market fixed-income portfolio manager at Ninety One, in a client note.

Argentina’s international dollar bonds rose 10–15 points in early trading, recovering from recent weakness, with the 2038 maturity climbing to around 74 cents on the dollar.

U.S.-listed Argentine stocks also rallied, with financial shares gaining as much as 50% and the Global X MSCI Argentina ETF jumping 22%, after having fallen 10.2% year-to-date through Friday. Stocks traded on U.S. exchanges (.BKAR) were up 40%.

Path Clears for Accelerated Reforms

The results could allow Milei to accelerate one of Argentina’s most sweeping economic overhauls in decades, aimed at restoring confidence in a country struggling with chronic inflation and a shortage of hard currency.

Investors pointed to Milei’s more measured victory address as a sign that he may succeed in building alliances needed to pass key legislation.

After a disappointing performance in last month’s Buenos Aires provincial elections, Argentine assets had been volatile. The peso had weakened about 25% since April, when the government partially lifted foreign-exchange controls, and was down roughly 30% for the year.

It briefly strengthened over 10% following U.S. Treasury Secretary Scott Basent’s late-September announcement of financial backing for Argentina but later lost ground again, closing Friday at a record low of 1,491.50 per dollar.

Argentina’s international dollar bonds have been among the worst-performing emerging-market high-yield assets this year — down about 10% year-to-date — after returning more than 100% in 2024. The local stock benchmark (.MERV) hit a one-year low last month but has since rebounded more than 20%, though still 30% below its January peak.

Investor Optimism Grows

With Milei’s party now in a stronger position in Congress, investors expect renewed capital inflows and reduced political risk ahead of the 2027 general elections.

“Yesterday’s midterms extend the horizon for both financial and real-asset investment in Argentina,” said Graham Stock, senior sovereign strategist at RBC BlueBay Global Asset Management.

Some investors still anticipate reforms to the foreign-exchange framework — potentially expanding the peso’s trading band or moving toward a freer float — but confidence in Milei’s market-driven approach alone could strengthen the currency, Stock added.

Carmen Altenkirch, an emerging-markets sovereign analyst at Aviva Investors, said the results could trigger a “virtuous cycle,” as locals start selling dollars again.

“I think a stronger exchange rate is achievable,” Stock said. “Falling reserves remain a key weakness, so the government must use the peso’s strength to rebuild them — something that’s still possible within the current system.”