The unexpected defeat of the ruling party (Juntos por el Cambio) in the primary elections hit deeply in investor’s confidence due to a dramatically changed economic outlook towards 2020.
The peso fell 25% against the dollar and risk spreads widened to more than 2,000bps. In order to control economic damage, the government set capital controls, postponed short term debt payments and moved forward to expansionary fiscal policies that compromised the deal reached with the IMF.
Despite the selloff in domestic assets has been across the board, utilities and banks stocks have been hit harder.
The opposition candidate with the greatest chance of winning the October 27 elections, Alberto Fernandez, expressed his intention to boost Vaca Muerta oil & gas production, abiding to the contracts’ legal terms. However, doubts still remain about his energy policy.