Argentina stocks and U.S.-listed ETFs tumble amid rising political uncertainty

[Close-up view of the national flag of the Argentine Republic]
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Argentina's financial markets are facing significant turbulence, with domestic stocks and U.S.-listed ETFs seeing a downturn amid a strained political environment.

The selloff was driven by Argentine President Javier Milei's ruling party losing in a key provincial election in the Buenos Aires province.

The Peronist opposition secured 46.8% of the vote, compared to Milei's 33.8%, leading to an increase in political instability and investor apprehension, according to media reports.

The country's benchmark, the S&P MERVAL Index (MERVAL [https://seekingalpha.com/symbol/MERVAL]), was down 11.35% and fell 21.16% since the start of the year.

The loss of Milei's ruling party comes ahead of the important national midterm elections on October 26.

The Global X MSCI Argentina ETF (NYSEARCA:ARGT [https://seekingalpha.com/symbol/ARGT]), which provides U.S. investors with exposure to Argentine equities, is down 10.6% and has fallen 13.7% since the start of the year.

Argentina's economy has been battling challenges for the past few months. In April, the International Monetary Fund reached a preliminary agreement with Argentina on a $20 billion bailout.

Milei had implemented sweeping changes [https://seekingalpha.com/news/4387561-argentina-emerges-from-recession-president-milei] after he was elected in December 2023. However, his reforms had pushed the poverty rate higher.

Other Argentina-related stocks include Banco BBVA Argentina (NYSE:BBAR [https://seekingalpha.com/symbol/BBAR]) -22.4%, Grupo Financiero Galicia (NASDAQ:GGAL [https://seekingalpha.com/symbol/GGAL]) -19.1%, Grupo Supervielle (NYSE:SUPV [https://seekingalpha.com/symbol/SUPV]) -20.6%, Banco Macro (NYSE:BMA [https://seekingalpha.com/symbol/BMA]) -22.5%, YPF S.A. (NYSE:YPF [https://seekingalpha.com/symbol/YPF]) -16.7%, Pampa Energía (NYSE:PAM [https://seekingalpha.com/symbol/PAM]) -18.3%, and Cresud S.A.C.I.F. y A. (NASDAQ:CRESY [https://seekingalpha.com/symbol/CRESY]) -12.3%.

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