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Analyzing Milei’s victory through an investment banking lens


Nov 21, 2023

After the first reactions on Wall Street regarding the election of Javier Milei, the main players in the international financial market turned their attention to the need for urgent and profound reforms and the margin of action that the leader of La Libertad Avanza will have to carry them out.

Although Milei’s first speech as president-elect was characterized by unexpected moderation and the economist avoided referring to his two battlehorses during the campaign, such as dollarization and the closure of the Central Bank, the financial market believes that the plan libertarian is “bold” and that can threaten financial stability.

Jaime Reusche, Vice President – Senior Credit Officer de Moody’s Investors Service stated that Milei faces extreme challenges with highly uncertain outcomes. The credit agency focused on the consensus necessary to carry out the proposed reforms and on governance and noted its concern about a divided Congress and social pressures that will influence the incoming president’s ability to implement corrective policies.

In a report for its clients, JP Morgan warned about the risks of implementing the measures announced by Javier Milei. They noted that his proposed reforms are bold, but that there may be political maneuvering that will hamper their implementation. They also believe that governance risks loom given the lack of party structure and the distribution of power in Congress after the general elections.

The US bank also believes that the main pillars on which Milei built his narrative throughout the campaign have been dollarization and the reduction of the size of the State in the economy. They noted the possible presence of members of the PRO in the Cabinet to mitigate the attempts at bolder reforms. For the Milei bank, another year could pass before the decision to go for a dollarization of the economy is made.

Meanwhile, Barclays also focused on governance and warned that for Milei the biggest challenges will come from the social front. They believe that the economic results will be key in determining whether or not Milei is able to maintain the support of the middle-income sectors.

By Editor

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