Argentina’s largest companies began an impressive revaluation process after the election of Javier Milei in November last year. This is what a report published this weekend by the newspaper states. The Nation and based on data from the Merval index, the main indicator of the Buenos Aires Stock Exchange.
Composed of the 21 companies in the country with the highest volume of operations on the stock market, Merval recorded an increase of US$61.3 billion in its total capitalization in the last 12 months – equivalent to almost 130%.
This growth does not just reflect the coming to power of a libertarian politician, who repudiates state control and encourages the free market above all else. The matter of The Nation remembers that Milei’s government promoted much more than a change of mentality: it reduced inflation, cleaned up a significant part of public finances and gave greater freedom to entrepreneurs.
The result of this reform is a wave of optimism that has boosted companies and brought international investors, attracted by a favorable and unprecedented business environment in Argentina.
The banking and energy sectors benefited most from the new government’s policies. The drop in country risk from 1,900 points to 769 allowed banks such as Galicia, Macro and BBVA to grow around 300% since December 2023.
The capitalization of energy companies, stimulated by tariff adjustments, increased by 195%, from US$4.3 billion to US$12.8 billion – with emphasis on the oil giant YPF, explorer of large gas and oil reserves.
Even utility companies like natural gas carrier Southern Gas and the electrical distributor Edenor, registered significant growth, simply taking advantage of this context of greater economic predictability.
The next step in recovery is to increase access to credit
Heard by the news report The Nationinvestment analyst Tobías Sanches, states that the next step in this positive cycle is to allow greater access to credit, motivated precisely by the recovery of large local companies.
“This increase has the potential to positively impact the entire real economy, boosting the job market and creating more opportunities for investors and entrepreneurs,” says Sanches.
But Argentina still has a series of macroeconomic difficulties, especially with regard to the exchange rate and negative reserves.
José Ignacio Thome, another financial analyst interviewed by The Nationbelieves that the market’s natural volatility is the main obstacle for Milei’s government from now on. “It is a factor that must be taken into consideration, as the next few months will bring challenges related to inflation and the management of external debt”, he states.
