Javier Miley's candy shop: what to buy in Argentina after the victory of anarchocapitalism

After the victory of Argentine President Javier Miley's La Libertad Avanza movement in the interim parliamentary elections, faith in the success of his economic program has increased significantly. On the first trading day after the vote, the markets reacted with a rapid growth: the peso strengthened by 3.8%, the MERVAL index jumped from 1.15 million to 1.4 million points in the moment, the quotes of the largest companies soared. For many observers, this signaled that a country associated for decades with crises and defaults was back on the map for global investors.

The most obvious direction for investors in the case of Argentina would be the energy and commodities sector. The report J.P. Morgan Argentina Equity Strategy: Equity Views Ahead of the Mid-Term Elections predicted that a favorable result for Miley "will open the door to a cycle of revaluation of Argentine equities, with the potential to double multiples while consolidating political governability". Energy remains the most volatility-resistant sector, according to the bank's analysts. Vista Energy is cited as the top investment idea, showing strong earnings at valuations below regional peers. Pampa Energía and oil and gas company YPF are also mentioned.

In the long term, the Vaca Muerta cluster - one of the world's largest shale formations, which could turn Argentina into a gas and oil exporter for the entire region - looks attractive. Adding to this is the lithium boom: the provinces of Salta, Jujuy and Catamarca form part of the "lithium triangle" along with Chile and Bolivia, and global demand for this metal is growing thanks to electric vehicles and battery demand.

In the financial system, J.P. Morgan notes that banks are a "bet on macro stability". And recommends to pay attention to Banco Macro, which has a strong market position and Banco Galicia - here there is a potential for revaluation in case of growth in demand for loans.

BBVA Argentina shares rose 30.5% on the first trading day after the election, reflecting hopes for the development of the banking system. Fintech should not be discounted either. Argentina stands out in Latin America as a laboratory for digital services, with players such as Mercado Libre and Ualá.

Assets that Miley is willing to privatize can be added to the waiting list. Aerolíneas Argentinas, Correo Argentino, state-owned TV channels and agencies, and railroad and energy companies are on the list to reduce the state's stake or sell. The partial privatization of YPF and opening access to infrastructure assets to strategic partners could be the biggest deals of the decade.

Javier Milei's economic program, implemented from 2024, has already produced visible results: inflation, which reached 211% in December 2023, fell to 44.7% by Ma 2025; by the end of the year, as forecasted by the Organization for Economic Cooperation, it will be 37%. The budget, which had a deficit of 3% of GDP, went into surplus of about 1.8% for the first time in decades; poverty fell from 40% to 33%. But as analysts warn, these figures mask the fragility of the model, where any external or internal blow could send the country back into another crisis.

"All the inertia is now on his [Miley - Oninvest's note] side, and he has the strongest position ever to push for reforms in Congress, Gustavo Medeiros, head of research at Ashmore Group, told Reuters:

The first risk is the social cost of reforms. The reduction of subsidies led to an increase in transportation and energy tariffs. In 2024, utility bills increased by 200-250% on average, which was a shock for low-income families. Real wages fell by more than 10% over the same period. While poverty has statistically fallen, the decline has been uneven: the middle class has borne the brunt, and union protests and street actions in Buenos Aires have become a regular occurrence. In a country where the memory of the 2001 crisis - a $100 billion sovereign debt default - is still fresh, the risk of mass mobilization of protesters remains extremely high.

The second risk is related to the political architecture. Since the 2025 elections, La Libertad Avanza has increased its presence in parliament to about 110 seats in the lower house and 28 in the Senate - that's about 40% of the seats. The growth is significant, but still not an absolute majority. To implement systemic reforms - whether privatizing YPF or eliminating export duties in agribusiness - Miliay will have to seek ad hoc alliances with governors and moderate parties. This means that any wave of social discontent could quickly convert into parliamentary resistance, and key legislation could get stuck in commissions.

The third risk is currency and debt. Despite the peso strengthening after the elections from 1100 to 990 per dollar and the MERVAL index rising by more than 20%, the Central Bank's foreign exchange reserves remain low. U.S. support in the form of a $20 billion swap line in October 2025 and direct peso purchases has temporarily stabilized the situation, but this does not address the fundamental problem. Argentina remains dependent on external financing and vulnerable to commodity price fluctuations. In 2018, even a $57 billion IMF credit line could not prevent another devaluation: a similar scenario cannot be ruled out today. This is a good chance to liberalize monetary policy, but it is not certain that Miley will take advantage of it, quoted by Bloomberg Pedro Siaba Serrate , head of research and strategy PPI Argentina:

The fourth risk is related to the external environment. Argentina relies on exports - oil, gas, lithium, agro-products. But the world market remains volatile. A drop in soybean or oil prices will automatically hit foreign exchange earnings. In addition, the cooling of relations with China - one of the largest trade partners - deprives the country of some export opportunities.

Argentina's stabilization is still more about discipline and rigidity than growth. The economy contracted by 1.7% in 2024 and is expected to grow by 4.5% in 2025, but this recovery remains fragile.

The history of the past decades shows: every wave of stabilization in Argentina has sooner or later faced a limit, whether it was the 2001 default crisis or the 2018 currency shock. Milea has a chance to break the cycle, but success depends on turning the harsh "shock therapy" into a sustainable growth trajectory while maintaining social and political governability.

It is important for investors that Miley's top priority remains privatization and fiscal reform. The government already has a budget surplus, and now reducing the tax burden on business is on the agenda. The package of incentives for large investors is likely to be expanded, which could provide a stimulus for growth in energy, agribusiness and infrastructure.

The economy could also benefit from the promised dismantling of the rigid system of labor contracts. Its complete abolition, as promised by Mealey in the 2023 campaign, is unlikely to be possible due to opposition from labor unions. However, point changes - flexibility in labor contracts - have a chance of passing through parliament.

Miley's loudest idea - dollarization and elimination of the Central Bank - has almost lost its chances for implementation in the current term. Argentina does not have the reserves to switch to the US dollar, and political resistance is too great. Most likely, this topic will remain a symbolic marker rather than a practical policy.

This article was AI-translated and verified by a human editor