There’s no tasteful way to do this, so we’ll let the wires do the talking.
Argentina stocks rose the most in two years in New York trading as some investors speculated the death of former President Nestor Kirchner will lead to a more- stable economy and reduced government spending.
The MSCI Argentina Index gained 10 percent to 3,458.64 at 10:58 a.m. New York time. It rallied as much as 13 percent, the steepest intraday advance since Nov. 24, 2008. Grupo Financiero Galicia SA, the South American country’s biggest consumer lender, surged as much as 26 percent.
Reuters
ARGENTINA CREDIT DEFAULT SWAPS SPREAD NARROWS 39 BASIS POINTS TO 659 BPS AFTER NEWS OF KIRCHNER DEATH – MARKIT
ARGENTINA GLOBAL 2033 DISCOUNT BONDS UP 2 POINTS IN PRICE TO BID 91.188
ARGENTINA GLOBAL 2038 PAR BONDS UP 0.812 POINTS TO BID 44.625, YIELDING 8.726 PCT AFTER NEWS OF KIRCHNER DEATH
According to BarCap, which is hosting a conference call on Kirchner’s death at the moment, the market reaction can be easily explained.
Markets are likely to respond with a rally, as President Kirchner was perceived as an obstacle to negotiations with the IMF (a useful lender of last resort) and an obstacle to more active market participation.
RBC Capital reckons the passing of Kirchner stregthens the position of the more market friendly presidential candidates:
This news is bullish for Argentine assets (5-yr CDS 35bps tighter on the day), as a result of higher odds that more market-friendly presidential candidates are strengthened, which prompts a shift to orthodox economic policies. However, we believe it is also worth being cautious as the shifting political power balance is likely to drive elevated levels of political noise and volatility.
We believe Nestor Kirchner was the main political operator for the government and that his leadership was the factor that kept the government’s political power base together. His death could cause President Cristina Fernandez Kirchener’s (CFK) power base to fragment, decreasing the chances that she runs for re-election.
Related link:
Néstor Kirchner suffers fatal heart attack – FT