‘Amazon of Argentina’ Stock Plunges as Fernandez Win Shocks Market
Originally published on: CCN Markets
Read the original article
August 12, 2019
Argentine markets suffered what can only be characterized as a bloodbath on Monday, subjecting the peso, bonds, and local stocks to brutal declines.
The reckoning spread beyond the shellshocked country’s borders, and one Nasdaq-listed firm dubbed the “Amazon of Latin America” suffered a merciless correction.
Populist Alberto Fernandez Creams Mauricio Macri in Argentine Primaries
Argentina’s stock market plunge immediately followed Alberto Fernandez’s shocking victory in the country’s presidential primaries.
The center-left populist Fernandez – whose running mate is notorious former president Cristina Fernandez de Kirchner – threatens to unseat market-friendly President Mauricio Macri when voting begins on October 27.
Fernandez and Kirchner scored an impressive 47.7% of the vote, with Macri and his running mate – Miguel Angel Pichetto – finishing a distant second with 32.1%. Though largely symbolic, the vote doesn’t bode well for the incumbent’s odds two months from now.
MercadoLibre Stock Plunges More Than 10%
The primary vote’s fallout rippled throughout the global markets, one ingredient in a poisonous cocktail for equities bulls.
MercadoLibre, the $30 billion e-commerce giant based out of Buenos Aires, saw its stock price plunge an excruciating 10%, despite the facts that its shares trade in the US on the Nasdaq and the company has significant operations – and ambitions – outside Argentina.
The “Amazon of Latin America” posted stellar results during last week’s earnings presentation, recording a 63% increase in revenue and net income of $16.2 million thanks to significant growth in Mexico and Brazil.
However, the prospect of continuing that growth in a frosty business climate overseen by Alberto Fernandez sent MELI shareholders into a panic.
MercadoLibre stock fell 10.62%; it last traded at $616.81 after bouncing significantly off its session low of $585.73.
But overreaction or not, weathering a Fernandez-run government is a tall order, especially since “Argentina’s Amazon” must contend with rising competition in Latin America from another e-commerce giant: Amazon.
Josiah is the US Editor at CCN, where he focuses on financial markets and cryptocurrencies. He has written over 2,000 articles since joining CCN in 2014. His work has also been featured on ZeroHedge and Investing.com. He holds bitcoin, but does not engage in day trading. He lives in rural Virginia. Follow him on Twitter @y3llowb1ackbird or email him directly at josiah.wilmoth(at)ccn.com.