Zinger Key Points
- Musk's endorsement of Argentina on X drove the Global X MSCI Argentine ETF up over 1%, with a 55% gain since November 2023.
- Shares of leading Argentine banks like Banco Macro, Grupo Financiero Galicia, and Banco BBVA Argentina soared by over 100% since early 2024
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“I recommend investing in Argentina” — a few words from Elon Musk on social media platform X bolstered Argentine assets to new heights, underscoring investor confidence under new President Javier Milei’s administration.
The Global X MSCI Argentine ETF ARGT, which tracks the performance of leading Argentine stocks, registered over a 1% increase shortly after markets opened in New York.
This marks the ETF’s eighth gain in nine sessions, culminating in a 54% rally since Milei’s election victory in November 2023.
The bullish sentiment extended to Argentine fixed-income assets, particularly dollar-denominated bonds. Notes maturing in July 2030 spiked to 55 cents on the dollar, more than doubling their value since the election of the libertarian President, who many now regard as having a Midas touch on the nation’s financial market.
Investor optimism has been particularly robust within the banking sector. Shares in major Argentine banks like Banco Macro S.A. BMA, Grupo Financiero Galicia S.A. GGAL, and Banco BBVA Argentina S.A. BAR soaring by more than 100% since the start of the year.
Chart: Milei’s Midas Touch On Argentine Stocks, Banks
Argentina’s Central Bank Slashes Rates As Monthly Inflation
Earlier this month, Argentina’s central bank made a significant move by cutting the benchmark interest rate by 10 percentage points to 50%.
This adjustment, the fifth since December and third in three weeks, was prompted by a noticeable slowdown in monthly inflation.
At the end of 2023, the monthly inflation rate in Argentina surged to 25%, indicating a perilous path towards hyperinflation.
March’s inflation data revealed a slowdown to 11% month-over-month, lower than the anticipated 12.1%.
In addition, Milei’s administration bolstered the country’s fiscal measures. In the first quarter of the year, Argentina achieved the first budget surplus in 16 years.
“If the state does not spend more than it collects and does not issue (money), there is no inflation. This is not magic,” Milei stated.
IMF Commends Argentine Efforts
The International Monetary Fund (IMF) has praised Argentina for its “ambitious stabilization plan,” noting the country’s progress in restoring macroeconomic stability, as Julie Kozack, head of the Communications Department at the IMF, said in April.
With improved fiscal management, rebuilding of international reserves, and better-than-expected inflation control, Argentina is seeing positive changes in key economic indicators.
In February, the IMF approved an immediate disbursement of $4.7 billion to Argentina, part of a larger effort to support the country’s economic reforms. This brings the total IMF disbursements under the current arrangement to approximately $40.6 billion.
Looking ahead, the Argentine government’s commitment to fiscal discipline and inflation control sets a promising course for continued economic recovery. With international support and robust policy measures, Argentine assets could continue to witness the continuation of their bullish momentum.
Image: Shutterstock
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