Argentina’s primary elections: Opposition candidate Alberto Fernandez won by largerthan-expected margin against President Macri. At this point, markets price in Fernandez’s victory in October elections.

Investment views on Argentina: The primary vote outcome was a negative surprise for the market. Argentine assets collapsed after Macri’s defeat. Argentina’s stock market index (the Merval index) fell by 48% in USD terms on Monday – the second biggest single day fall of any stock market in the world, ever. Recent events, threatening the reform path and increasing the risk of debt restructuring, should lead investors to reconsider Argentina’s investment case. We have become much more cautious on the external debt, while we confirm our conviction that local currency debt is unattractive from a risk/return perspective.