General Election First Round Analysis - 23 October 2023
With no candidate earning enough votes to win the election outright, Argentina will return to the polls on November 19 for a runoff election between Sergio Massa and Javier Milei.
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With over 98% of votes counted, Argentina’s general election results are in:
Unión por la Patria (UxP): Sergio Massa: 36.68%
La Libertad Avanza (LLA): Javier Milei: 29.98%
Juntos por el Cambio (JxC): Patricia Bullrich: 23.83%
Hacemos Nuestro País: Juan Schiaretti: 6.78%
Frente de Izquierda: Myriam Bregman: 2.7%
The biggest surprise of the night (or not, if you were like Boz), was Massa’s overperformance. As the current Economy Minister presiding over 138% inflation and a 40% poverty rate, this election was Massa’s to lose. The Juntos por el Cambio (JxC) opposition coalition had been in pole position before the rise of outsider libertarian Javier Milei, who took Argentina’s right - and part of its left - by storm. Over 77% of the population participated in yesterday’s election, higher than the 69% voter turnout in the PASO primaries in August. The country will now head to a second round election on November 19.
What happens now?
With JxC’s Patricia Bullrich officially out of the race, Argentina will head to a second-round election to choose between Massa and Milei. Massa jumped almost 9 points from his PASO primary showing, up to 36% from 27%, while Milei held steady at 30%. Has Milei’s rise hit a ceiling, or will the libertarian still have room to grow?
The real question now is where Bullrich’s - and to an extent, Schiaretti’s and Bregman’s - votes go. It is likely that most Bullrich voters will turn to Milei in the second round, given both candidates are more ideologically similar to each other and represent a firm shift away from the ruling Peronist party. However, many analysts warn that her relatively homogenous voters do not share many of the values espoused by Milei’s anti-establishment “chainsaw plan” and may not turn to the libertarian in November. A group of moderate JxC voters could vote for Massa or they could just stay home or cast blank ballots.
Despite his role as JxC coalition leader, former president Mauricio Macri has been developing closer ties with Milei over the past months, with Milei even announcing he would create an ambassadorial position for Macri if elected. A Macri endorsement would provide an important boost for Milei, convincing Bullrich’s voters to turn to LLA. In his speech last night, Milei admitted he would be willing to come to an agreement with JxC to earn their votes in the second round, meaning he is likely to further tone down his rhetoric as he attempts to appeal to voters who don’t necessarily approve of his persona nor his proposals.
Though dissident Peronist Schiaretti and leftist Bregman individually had never truly had a shot at the presidency, the majority of their votes will likely go to Massa.
All of this means that Milei remains the favorite, but a second round election between Milei and Massa will be much closer than what was expected two months ago.
Market Impact
Massa’s win prevented - or at least stalled - a Monday morning devaluation of the peso, something that was to be expected had Milei come in first place. As of the writing of this newsletter, the peso’s unofficial blue market rate dropped to $900, a number just below its value over the past few weeks. As Reuters notes, the election results are also unlikely to cause a big market slide today, as a radical shift in the country’s economic policies becomes less likely to occur. It is also noteworthy that the “crypto dollar,” one of Argentina’s various parallel exchange rates, strengthened last night as the results of the election began to come in. However, the country’s bonds extended their losses this morning, “with five of them including the 2029 note figuring among the worst performers in emerging markets.”
As noted after the PASO, Massa has a good relationship with Washington and is seen by markets as the most economically rational of the three candidates, despite current economic malaise. Milei’s economic proposals have been mostly inconsistent throughout his campaign, bringing chaos and uncertainty to markets.
Congressional Results
Also up for grabs in this election were 24 Senate seats and 35 legislative seats. UxP managed to retain its majority in the Chamber of Deputies and regain its majority in the Senate, making the Peronist bloc one of the most important actors in the legislative process. Critically, in the event of a Milei presidency, this means the Congress is unlikely to help pass most of Milei’s policy proposals and will fight the executive at every turn. The opposite is true of a Massa presidency, considering the governing coalition would hold a majority in both chambers and could help streamline certain policies. There are a total of 257 seats in the Chamber of Deputies, and 72 seats in the Senate.
In the Chamber of Deputies, UxP will have 108 seats, followed by JxC with 93 and LLA with 37. The big winner of the night was LLA, which earned 34 seats; UxP lost 10, and JxC lost 25.
In the Senate, UxP will have 34 seats, followed by JxC with 24 and the inaugural LLA bloc with 8. UxP gained two seats, while JxC lost nine.
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Mission complete. Bullrich was knocked out. She was opposed by all other players, who combined forces against her like a game of cutthroat croquet. Any of those four could "win" now, and I doubt anything would change.