World Markets

Argentine markets on edge as Fernandez names transition team

Credit: REUTERS/AGUSTIN MARCARIAN

Argentina's president-elect Alberto Fernandez has appointed a small transition team until his government takes over in December, but financial markets were left still on edge with no clear sign yet of his picks for key economy roles.

By Nicolás Misculin

BUENOS AIRES, Oct 29 (Reuters) - Argentina's president-elect Alberto Fernandez has appointed a small transition team until his government takes over in December, but financial markets were left still on edge with no clear sign yet of his picks for key economy roles.

The country's wobbly markets edged down on Tuesday, with the peso ARS=RASL weakening 0.33%, while over-the-counter bonds and the Merval stock index .MERV dipped. The black market peso however jumped with high month-end demand for local currency.

Moderate Peronist Fernandez, who won an election victory on Sunday, appointed a four-person team of confidante Santiago Cafiero, "Kirchnerist" Eduardo de Pedro, former justice minister Gustavo Beliz and former senator Vilma Ibarra to negotiate the transfer of power with defeated incumbent Mauricio Macri's team.

The group does not include any economists, leaving up in the air the key question investors are asking, which is who will lead Fernandez's economic team as the country's grapples with currency and debt crises.

"Traders are sensitive and impatient given the high vulnerability with the complex current scenario," said Gustavo Ber, Buenos Aires-based senior economist at Estudio Ber.

"They want him to define things quickly, to allow them to not only get past the electoral uncertainty but also make clear the future economic outlook."

Fernandez and Macri met on Monday to discuss a transition of power as Fernandez looks set to take Argentina in a new direction to the business-friendly reform agenda espoused by Macri, a staid former magnate with close ties with the United States.

Markets are closely watching for signals from Fernandez about how closely he will work with Macri to smooth what has potential to be a tricky transition until the new government starts on Dec. 10.

"The only way to release market tension is to give a confidence boost with a credible economic team and a preventive plan for negotiations with the IMF," said Siobhan Morden, managing director of Amherst Pierpont Securities.

Argentine media has reported that Cafiero could be in line to be the Cabinet chief, while Pedro is a potential interior minister. Ibarra, who previously dated Fernandez, wrote a book called "Cristina vs Cristina" about his now running mate.

Beliz served under former President Nestor Kirchner, during whose administration Fernandez was chief of staff.

Argentina's sovereign dollar bonds came under pressure earlier on Tuesday, with the benchmark international 2028 dollar bond 040114HQ6= down 1.1 cents to 37.1 cents in the dollar, while the 2023 issue 040114HP8= slipped 0.9 cents to 39.36 cents in the dollar, according to Refinitiv data.

Fernandez rode back to power as the electorate voted to ditch the economic liberalization and austerity of conservative Macri, with the economy on the cusp of a complex $100 billion debt restructuring.

The opposition election win is seen with some trepidation by markets, which still recall more interventionist policies under Fernandez's running mate, ex-president Cristina Fernandez de Kirchner, who ran the country between 2007-2015.

(Reporting by Nicolas Misculin; Additional reporting by Cassandra Garrison and Hugh Bronstein; Writing by Adam Jourdan Editing by Alistair Bell)

((adam.jourdan@thomsonreuters.com; +54 1155446882; Reuters Messaging: adam.jourdan.thomsonreuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Reuters

Reuters, the news and media division of Thomson Reuters, is the world’s largest international multimedia news provider reaching more than one billion people every day. Reuters provides trusted business, financial, national, and international news to professionals via Thomson Reuters desktops, the world's media organizations, and directly to consumers at Reuters.com and via Reuters TV.

Learn More