Argentina's sovereign dollar-denominated bonds fell as much as 4.3 cents on the dollar on Monday after Economy Minister Sergio Massa emerged as the surprise frontrunner in Sunday's general election.
The country's 2046 overseas note suffered the sharpest decline and was being bid at 22 cents on the dollar, while other notes fell between 2.35 and 4.22 cents on the dollar at 1122 GMT, according to MarketAxess data. ,
The U.S.-listed shares of Cresud SACIF y A and Banco BBVA Argentina fell 3.1% and 4.3%, respectively, in pre-market trading. Argentina's YPF shares are down 3.8% at $11.82.
"Massa and Milei both herald greater uncertainty," said Graham Stock, London-based senior EM sovereign strategist at RBC BlueBay Asset Management.
"In Massa's case, the key question is which strand of the broad Peronist coalition would dominate in his government. In Milei's case, the key question is how much of his radical economic and social agenda would he be able to implement," Stock added.
The surprising strength of the Peronists, despite overseeing inflation hitting triple digits for the first time since 1991, sets up a second round between two polar opposite economic models for the embattled country.
While investors had expected Milei to reach a runoff, Massa's strong performance is negative for asset valuations as it means that market-friendly candidate Patricia Bullrich is out of the race, said Bruno Gennari, emerging markets strategist and Sales at KNG Securities LLP.
"We will follow closely what the different leaders of Together for Change have to say about the winning candidates, as some members of the opposition coalition might not be so happy with embracing Milei," Gennari said.
Massa had 36.6% of the vote, ahead of Milei on just over 30%, while conservative Bullrich was behind on 23.8%. "To win, Massa and Milei need to win over Bullrich voters," added Kimberley Sperrfechter, emerging markets economist at Capital Economics.
