ARGENTINA: Despite public doubts, the markets see little reaction after President Cristina Fernandez announces run for re-election

Record ID: 444392

  • Title: ARGENTINA: Despite public doubts, the markets see little reaction after President Cristina Fernandez announces run for re-election
  • Date: 23rd June 2011
  • Summary: NEWSPAPER WITH HEADLINE SAYING: "THE PRESIDENT ANNOUNCED ON GOVERNMENT TV THAT SHE WILL GO FOR RE-ELECTION" NEWSPAPER WITH HEADLINE SAYING: "WE ARE GOING TO CONTINUE"
  • Embargoed: 8th July 2011 13:00
  • Keywords:
  • Location: Argentina, Argentina
  • Country: Argentina
  • Topics: Finance,Domestic Politics
  • Reuters ID: LVA1F74UGYK87DPYBQ80MV8K3SNJ
  • Story Text: The reaction to news that Argentine President Cristina Fernandez would run for re-election this October was muted in Buenos Aires on Wednesday (June 22).
    Fernandez had kept the nation guessing for months whether she would run or not, fueling speculation that health concerns or family pressures following her husband's death might persuade her to step aside.
    Newspapers ran the story as front-page news, but Argentina's markets only murmured slightly in reaction to the announcement.
    The Argentine peso remained stable at 4.095 to the dollar.
    Fernandez' leftist policies, which she vowed to continue, have infuriated investors despite a long economic boom in the South American country.
    But economic analysts say Fernandez' candidacy was already factored in to the markets and they expect things to remain stable until the elections in October.
    "I think that from now until October the economic scene will remain the same. I don't think the government will want to make any big changes because what is best for her is trying to warm up the economy so that people are happier when the elections arrive. After the elections there will be some changes. I think she will have to make some changes, especially in 2012. The risk then will be that she doesn't make [any changes] because maybe the economy will continue along fine and it is difficult for a government to implement changes when everything is fine in the economy," economic analyst, Fausto Spotorno, said.
    A re-elected government is expected to maintain its unorthodox and volatile policies, but some believe Fernandez will eventually have to address inflation, which is believed to be running at well above the official rate of around 10 percent.
    For now the president has approval ratings over 50 percent however, her popularity closely tied to the robust economic growth of the last eight years in Argentina.
    Fernandez also lacks a strong rival and the opposition remains splintered.
    Ricardo Alfonsin of the center-left Radical Party rose to prominence after the death two years ago of his famous father, the former President Raul Alfonsin.
    He is the strongest opposition contender but trails far behind Fernandez in the polls.
    Further down on the list is Eduardo Duhalde, another candidate from Fernandez' Peronist party but he has a high rejection rating.
    Experts warned there could be more volatility to come in the markets, as is usual during an election period.
    Yet stocks at the Buenos Aires exchange dropped only 8.08 percent on Wednesday while only 0.1 percent was shaved off bonds at 1524GMT.
    "As for the markets what we are going to see is more volatility, to comments from the different candidates. They could go up or down - there will be market fluctuations. Additionally we will also see a slowdown in investments because until it is known who is going to be the next president business will prefer to delay investment for a few months," Spotorno said.
    Many Argentines credit Fernandez' husband - former President Nestor Kirchner, who died last year - with pulling Argentina out a deep economic crisis.
    Sympathy for his mourning widow has thus been touted as another important factor in this October's elections.
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