Argentina’s Merval Rebounds 0.38% as Political Confidence Grows

The S&P MERVAL Index closed at 2,378,464.00 points on May 21, 2025, gaining 0.38% (8,958.75 points) from the previous day’s close.

This modest uptick builds on Monday’s stronger 2.21% rally, which was fueled by President Javier Milei’s electoral victory in Buenos Aires. Despite recent gains, the benchmark remains down 6.12% year-to-date from its January peak of 2,867,774.50.

Market sentiment continues to improve as Milei’s economic reforms gain traction. The weekend electoral results exceeded pollsters’ expectations and validated the president’s austerity measures.

This political development has renewed investor confidence in Argentina’s economic direction. The materials sector led sectoral gains with a 13.81% increase, boosted by the government’s approval of major mining projects.

Other strong performers included industrials (11.04%) and utilities (10.48%), while consumer discretionary lagged with just 0.89% growth. Among individual stocks, Transportadora de Gas del Sur (TGSU2) topped the gainers list with a 9.8% surge to AR$7,400 per share.

Ternium Argentina (TXAR) followed with a 12.8% jump to AR$643, though it remains down 33.4% year-over-year. Telecom Argentina (TECO2) rose 7.9% to AR$2,660, while energy giant YPF added 4.4% to reach AR$43,000. Banco Macro rounded out the top performers with a 4.4% gain to AR$11,200.

Technical analysis shows the MERVAL has broken above its 50-day moving average, signaling positive short-term momentum. The index now trades above both its 50-day and 200-day moving averages, confirming the bullish trend reversal.

Bollinger Bands have narrowed, indicating decreasing volatility compared to April’s turbulence. The RSI has moved from oversold territory in late April to neutral levels now, suggesting room for further upside.

Volume patterns show increasing participation on up days, validating the recent rally. Support levels have formed around 2,270,000, with resistance near 2,382,000.

Argentina’s economic fundamentals continue to improve. Analysts project 6.4% economic growth for March, marking the fifth consecutive month of year-over-year expansion. Inflation, while still high at 47.3% in April, has decreased significantly from March’s 55.9%.

The market’s valuation metrics have also normalized, with the P/E ratio at 14.9x, up from April’s 13.7x but well below January’s frothy 24.5x. Market capitalization has recovered to AR$91.9 trillion, reflecting growing investor confidence.

Foreign investment continues to flow into Argentine equities. The Global X MSCI Argentina ETF has seen substantial inflows, with assets increasing roughly seven-fold since Milei took office.

The lifting of capital controls in April, following a $20 billion IMF agreement, has positioned Argentina as a potential bright spot among emerging markets despite global economic uncertainties.