Chainsaw therapy is increasingly convincing financial markets. Proof of this is that while the Argentine president Javier Milei is strongly contested in his country for having cut public spending and welfare, to Wall Street his commitment to putting the accounts in order and containing inflation is appreciated.
To the point that not only the Buenos Aires Stock Exchange has been rallying for almost a year, practically since Milei took office, but investors are increasingly giving concrete signs of confidence. And so, after the International Monetary Fund has granted a discount on the repayment of the substantial loans granted in recent years to the South American country, now the Global X MSCI Argentina ETF grossed a record $22 million in the week ending November 144 alone, including $88 million on Friday, November 22 alone. Since Milei has been president, the fondo which allows investors to buy shares in Argentina, that is, to bet on the country's recovery, has increased by more than $600 million, going from 104 million to the current 750 million collected.
To bring it back is Bloomberg, which also quotes some analysts: "The Argentine president - said for example Malcolm Dorson, senior portfolio manager at Global X Management, the company that manages the Argentine ETF - does not just talk, he acts. Inflation is falling, economic activity is growing and this year the first financial surplus since 2012 was achieved".
The Milei recipe has brought benefits to inflation and real wages
The Milei recipe actually brought inflation to just 2,7% on a monthly basis in October, and succeeded in raising the real wages, although still insufficient in relation to the cost of living and the devaluation of the peso. The program of tax amnesty It also facilitated the entry into Argentina of approximately 20 billion dollars, a godsend for a country that desperately needs dollar reserves to guarantee its gigantic public debt.
However, to avoid the recession from continuing and to facilitate negotiations with the IMF, experts say Buenos Aires should now gradually loosen its controls on foreign capital. Skeptics, on the other hand, argue that this injection of confidence is just a flash in the pan, as had already happened with President Mauricio Macri: investors had become active by taking advantage of more market-friendly policies, but the effect then dissipated with the electoral defeat in 2019 and the return of Peronism.
Morgan Stanley, however, confirmed the “overweight” outlook for Argentina, that is, with positive expectations but not yet a “buy”, observing that the policies of fiscal consolidation and economic deregulation are exceeding forecasts: “The country has made extraordinary progress in 2024, we will continue to follow it closely”.
