Writing about Argentina’s economy on a regular basis has of late felt like an exercise in redundancy and hopelessness, muddled with depression. Today, that changed abruptly. Markets and moods are up on the shocking outcome of yesterday’s general election.

Opposition presidential candidate Mauricio Macri won a sufficient percentage to force Kirchnerism’s candidate Daniel Scioli to a second round. Adding insult to injury, the new governor of the Buenos Aires province shall be María Eugenia Vidal, rather than Cristina Fernández de Kirchner’s former cabinet chief Aníbal Fernández. These results were unexpected and show the world that Kirchnerism’s stranglehold on the economy can be broken.

In the United States, Argentine companies with stocks (ADRs) that trade in US markets jumped up to 22 percent, with the highest gains made by banks and financial institutions. Internationally traded bonds went up too, gaining an average of 2.9 percent across the board. Defaulted bonds hit their highest values since 2007.

Gains in the local market in Buenos Aires were equally pronounced. The Merval Index went up to 6 percent, with financial entities again leading gains and increasing in the double digits.

The parallel or “blue” dollar went down to 15.75 ARS/USD, from record highs of 16.30 ARS/USD only last week before the election.

These results are a huge deal, and the fact that they came as a surprise to both the market and political analysts demonstrate the potential inherent not only in Argentina’s economy, but from healthier Argentine institutions.

Argentina’s market gains run deeper than the following thought process:

  • Macri is “pro-business”
  • Reaching the second round (unexpectedly) increases the chances of Macri being President
  • Macri was behind Scioli by a very small margin of only 2.5 percent (complete surprise)
  • Ergo, the chances of having a “pro-business” president are now higher so I should buy some bonds

Argentina’s electoral institutions work, and Argentines have used them to send a clear message that they are tired of the thug-like behavior that characterizes Kirchnerite politics. Yesterday, Argentines demonstrated their ability to recognize the importance of holding politicians and state servants responsible for their behavior and actions, and their preference to elect candidates willing to take painful steps to dismantle some of the populist economic lies promulgated under Cristina.

Mauricio Macri has committed to negotiating a settlement with the so-called “vulture funds,” ending the foreign currency controls, normalizing import/export policy and addressing inflation. Kirchnerite candidate Daniel Scioli has promised to slowly maybe change some of these things over time with hope, and faith, and faith, and hope, and threatened that Macri’s policies will bring about poverty and despair like that experienced after the crisis of 2001. In the upcoming runoff, Argentines will be given the opportunity to make a clear choice between which version they prefer.

Peronism lost in the Buenos Aires province. If you take a look at my article castigating Peronism’s more populist personality traits, you’ll understand the psychological importance of the largest, richest, most populous province unequivocally voting against Kirchnerite Aníbal Fernández and what he stands for. Fernández has placed the blame for his loss on accusations from pseudo-journalist/entertainer Jorge Lanata that Fernández is involved in drug trafficking. The more likely reason is that Buenos Aires residents don’t want to be governed by a man whose tactics resemble those of a gangster rather than a statesman.

Image credit: La Nación
Image credit: La Nación

Regardless of who wins on November 22nd, Argentina has sent a clear signal that they are tired of being bullied by Kirchnerism. Before Sunday’s election, markets and analysts alike agreed Scioli would be Argentina’s next president. Now there is a very real chance that he will not.

And while markets loathe uncertainty, it appears they loathe Kirchnerism even more.