Argentina investors bet on Milei’s popularity

Investors who have been rewarded for their bets on Argentine President Javier Milei are doubling down on the country’s stocks and bonds even as they hit records, betting that an austerity crusade will pay further dividends.

Milei won the presidential election a year ago with a mandate to reshape South America’s second-largest economy, pledging to take a chainsaw to government spending and slam the brakes on printing more pesos.

A renegade campaign endeared him to Argentines fed up with the establishment, and with just enough legislative support to withstand a veto override, Milei pushed through a key reform bill that included steep spending cuts. The government recently marked its tenth consecutive monthly primary fiscal surplus. A tax amnesty has brought some $18 billion to local banks, according to a Reuters report.

Milei’s swift initial move to cut spending and stop printing cash was “one that investors can very easily buy into,” said Graham Stock, emerging markets senior sovereign strategist at RBC Global Asset Management.

What is surprising, he said, “is that the population has bought into it, and that has meant that his popularity has held up pretty well. Given the scale of the spending cuts, it’s pretty remarkable that he remains as popular as he does.”

A survey closely watched by markets from the Torcuato Di Tella university showed confidence in government, a proxy for Milei’s standing, rebounded in October after a September slip. Going back to 2003, only Peronist Nestor Kirchner and centre-right Mauricio Macri scored better than Milei at this point of their term.

Other surveys show Milei’s popularity and disapproval ratings at around 50-50.

Argentina is in the second year of a recession, with the International Monetary Fund estimating a 3.5% contraction in economic output this year. At the same time its dollar bonds have returned almost 90% this year, and the local stock market is up 125%, the Reuters report adds.

“I think it comes down to how fast Milei will be able to get the turnaround,” said Gordian Kemen, head of EM sovereign strategy (West) at Standard Chartered Bank. “Will he be able to generate enough jobs, enough well-being for the electorate before it comes to the midterm election?”

Argentina’s October 2025 midterms, which will decide half of the seats of the lower legislative Chamber of Deputies and a third of the Senate, will provide a key barometer of his chances of not just enacting his economic plan but becoming an established political force.

“I’m not saying that Milei has to be at peak popularity at all times. I’m just saying that you don’t want to see him become unpopular for some reason,” said Shamaila Khan, head of fixed income for Emerging Markets and Asia Pacific at UBS Asset Management.

“What we’re watching is that there is nothing that hinders or deviates from the policies that the country has been pursuing. The possibility that the country doesn’t need another restructuring is slowly starting to get priced in.”

Some investors are hoping Argentina will get an additional market boost from the president’s newfound alliance with US President-elect Donald Trump, whom Milei met in Florida last week. He was the first foreign leader to meet the Republican since he won the election.

“There should be close policy alignment between the US and Argentina, and that should translate into the US supporting Argentina for various issues, including IMF renegotiations,” said Standard Chartered’s Kemen.

Argentina’s payments to the IMF total just over $3 billion in 2025, and increase annually to near $9 billion in 2028. That should not be a problem for a $600 billion economy, but building up dollar reserves remains an issue.

Yet investors take comfort from the approval of a $57 billion IMF programme during the first Trump presidency.