BUENOS AIRES, Oct 3 (Reuters) - Argentina’s leading Merval stock index rose for a 13th straight session on Tuesday, the longest streak in its history, as growth picks up and polls show the market-friendly government is likely to win in October’s legislative elections.
The index rose 1.3 percent on Tuesday to close at 26,682 points after surging to a record-high 26,691. In a banner year for emerging market stocks, the Merval has outperformed regional peers, climbing 58 percent so far this year compared with 31 percent for Chile’s IPSA and 27 percent for Brazil’s Bovespa.
The rally accelerated in August after President Mauricio Macri’s coalition performed better than expected in congressional primaries, seen as a dry run ahead of the Oct. 22 midterm vote. Most crucially, Macri’s candidate nearly beat former populist President Cristina Fernandez in a key Senate race.
“The stock index’s movement comes in a context of positive economic data at a local level, amid polls that favor the [ruling coalition] ahead of October’s congressional elections,” Buenos Aires investment bank Puente wrote in a Tuesday note.
Energy companies led the gains, with Sociedad Comercial del Plata up more than 7 percent and local shares of Brazil’s Petrobras up more than 5 percent. Oil company shares, including state-owned YPF SA, have surged since the government suspended domestic fuel price controls late last month.
Economic indicators released after the August primary have continued to show improvement, potentially giving Macri’s candidates a boost. The economy expanded 2.7 percent year-over-year in the second quarter, government data showed last month, while poverty fell to 28.6 percent.
While Macri’s “Let’s Change” coalition will remain a minority in both houses of Congress, a strong performance would strengthen its hand in negotiations with opposition lawmakers to advance its pro-business agenda, including reforms to the country’s tax code and capital markets regulations.
More recent polls have shown Macri’s candidate, former education minister Esteban Bullrich, ahead of Fernandez in the Senate race for Buenos Aires province, home to nearly 40 percent of the country’s electorate.
A defeat for Fernandez would reduce the likelihood she returns to the presidency in 2019, a prospect that spooks foreign investors. Her two terms from 2007 to 2015 were marked by interventionist policies such as capital controls and expropriations.
“The markets are rising because of future events that we believe will take place,” Claudio Zuchovicki, development manager at the Buenos Aires stock exchange, wrote on Twitter on Tuesday. (Reporting by Jorge Otaola and Luc Cohen; Editing by Leslie Adler)
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