The influence of elections on the stock market

Argentina has one of the biggest economies in South America. Argentina was an economic power during the twentieth century. Unfortunately, during the last several years, the country experienced a severe financial crisis. Due to the ongoing situation, investors became more cautious, and this might have a negative impact on the local economy.

Several days ago current President Mauricio Macri lost the primary election to his opponent Alberto Fernandez. According to the results Macri received 32% of votes while his opponent from main opposition received 47% of total votes.

Macri implemented austerity measures, which made him less famous in Argentina. The results of the primary election had a negative impact on the stock market. As it increased fears among investors regarding the future of the local economy.

The presidential elections in Argentina are due in October.

Stock market update

The reaction of the stock market once more underlined the feelings of investors. The recent crash of the stock market is the second biggest in more than 50 years. This fact once more highlights the importance of the elections on the stock market.

For instance, the S&P Merval Index declined by 48% on August 12. It was the second-largest drop since 1950. It is important to remember that the Merval Index is the most significant index of the Buenos Aires Stock Exchange.

Another problem is the dollar-denominated bond with the interest rate of 8.75% suffered after the results of the primary election. Its price decreased from 73 cents to about 45 cents.

On Monday Argentine peso 15% of its value against the U.S. dollar. On the next day on Tuesday the price of peso continued its demise.

Stock market’s reaction indicates that the local economy is facing severe problems. The primary election results raised the risks for investors interested in the local economy. The outcome of the next presidential election would have a tremendous effect on the local economy.