Merval Could Rally 30% Ahead of Runoff Vote, Chiarvesio Says

  • Merval benchmark index rises to highest in more than a year
  • Speculation increasing opposition's Macri could win presidency

The rally in Argentine stocks this week after the better-than-expected performance by the opposition in Sunday’s first-round election may just be the beginning, according to Banco Santander Rio SA analyst Walter Chiarvesio.

Argentine stocks could rally an additional 20 percent to 30 percent over the next three weeks ahead of a Nov. 22 runoff vote if opposition candidate Mauricio Macri consolidates his lead in polls, Chiarvesio said in an interview.

The Merval rose the most in the world Wednesday as investors anticipate a possible victory for Macri over ruling party candidate Daniel Scioli, who has campaigned on continuity with gradual changes. The utilities and banking sectors are the most attractive in the short-term, Chiarvesio said.

"The market is reacting to Macri’s good performance on Sunday and anticipating that Macri may win the election," Chiarvesio said.

The Merval rose 5.5 percent to the highest since July in Buenos Aires, led by Banco Macro, which soared 13 percent to a record. American depositary receipts of Argentine stocks also jumped more than 10 percent in New York trading, led by banks including Grupo Financiero Galicia SA and BBVA Banco Frances SA.

Macri’s policy proposals include ending capital controls on his first day in office and settling a decade-long dispute with holdout creditors from Argentina’s 2001 default. A Gonzalez y Valladares poll published in Cronista on Tuesday showed Macri with 45.6 percent support for the second round, compared with 41.5 percent for Scioli.

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