Argentina – The Power of Reform

CARLOTTA GUFFANTI
Investment Analyst, Sub-Saharan Africa & Argentina

On Sunday 22nd of November 2015, the victory of the center-righ opposition leader, Mauricio Macri, put an end to 12 years of populism.

However, according to history, the previous 4 non-Peronist presidents did not manage to conclude their term.

This is why we expect to see a slowdown in painful reforms during the run-up to the mid-term elections – one year from now – which will determine whether the Macri Government will remain in power until the end of its mandate.

Given the incredible pace at which Macri dosed up reforms to the Argentines, it is indeed no surprise that it held a 51.2% (+/-2.2%) approval rating by the end of October.

The so-called “honeymoon period” has in fact ended, but all Argentinians are ready to face the hardship, wholly confident in Macri’s capabilities to foster a positive future for the previously battered economy.

Macri’s road to recovery for Argentina has helped to address difficulties such as a framed up FX, an unsustainable subsidies structure, an inexistent pensions programme, poor international trustworthiness and the holdout's saga. In one fail swoop, all of the inevitable drawbacks will be forgiven for the greater good.

What’s next? A capital market reform which will attract foreign investors into the local Argentinian market, winning out MSCI rerating to EM once and for all