Argentines Stand by Opposition Candidate Fernandez as Market Turmoil Continues

(Bloomberg) -- Liliana Diaz may seem an unlikely source of investor panic.

And yet the 67-year-old doctor from Buenos Aires cast an enthusiastic vote for opposition candidate Alberto Fernandez in last Sunday’s primary election, contributing to his victory -- and the subsequent market rout. She remains undaunted.

“The government created this situation, it’s self-inflicted,” said Diaz.

Conditions at her state-funded institute for adults with disabilities deteriorated after President Mauricio Macri’s budget cuts, and if helping poor Argentines “is populism, it’s welcome by me,” she said. In any case, she added, the currency’s plunge “isn’t surprising, they kept the peso artificially strong and the election freed it.”

As Argentina limps into a second week following the electoral shock, attitudes are hardening on both sides of the political divide. That polarization suggests little appetite for a common front to convince markets that Argentina is a safe bet -- and without that reassurance, voters and investors alike face the prospect of a turbulent two months until the first round.

Macri supporters are clinging to hopes he can turn around his campaign and pull off an upset in the Oct. 27 presidential election. Backers of Fernandez and his running mate Cristina Kirchner, the former president, blame Macri for Argentina’s economic problems -- including a week of market turmoil that was capped by Argentina’s downgrading by two ratings agencies and the resignation of the economy minister.

The lack of common ground allows room for conspiracy theories to flourish. Macri fueled them when he said Monday, after the sell-off, that “this is just a sample of what’s going to happen.” The comment was construed as blaming voters for the market turmoil, and fed an opposition belief that he sought to punish Fernandez voters. Macri apologized on Wednesday.

“It was even worse that the president put the blame on people who have the right to vote,” said Sofia Gomez, 18, a ballerina at Argentina’s famed Teatro Colon. Gomez cast her first-ever vote for Fernandez, saying she’d seen too much economic pain under Macri. Fernandez “would be much better than what could happen if the current president continues his term for four more years,” she said.

Since the primary, Argentines have been withdrawing dollars from banks and keeping them at home. The stock market in South America’s second-biggest economy fell 48% in a day in dollar terms on Monday, the second-biggest rout for any market in the past 70 years. The yield on the nation’s century bonds spiked to an all-time high.

As Fernandez voters refuted arguments that his surprise win was the source of the rout, Macri’s supporters struggled to pick up the pieces. A poorly attended rally for the president on Friday night underscored how much momentum he’s lost.

Claims of Fraud

Macri’s supporters turned to another theory for his weak showing: voter fraud. They reasoned that last weekend’s outcome must have been tainted as it was so different from what pre-election opinion polls had suggested.

“I was sad, really sad, because I couldn’t believe the difference in votes,” said Nuria Barberis, a 43-year-old from suburban Buenos Aires, who joined other dedicated Macri voters in a Friday march toward the presidential palace to express support for the incumbent. “It seemed like a fraud to me.”

Mass gatherings routinely bring traffic to a standstill in Buenos Aires, yet buses zoomed by as marchers only filled half of one of the city’s wide avenues and hardly occupied a historic square. Some blamed the mediocre attendance on a holiday weekend; others said it was a result of poor planning. Whatever the reason, hope hung by a thread for a Macri comeback.

Macri’s rolled out a slew of temporary economic measures in a last-ditch effort to appease voters. Daniel Lamagne, an unemployed textile worker, said the stopgap measures rang hollow, “like the cheese in front of a mouse, and then it’s taken away.” Macri “should have done all this when he first took office,” said Lamagne, 54, a widower with two children.

Ezequiel Ciriacos, a 23-year-old student of aeronautical engineering, said that victory for Macri looked difficult now and “the only thing left for me is to come to marches like this.”

“If he doesn’t win, I suppose I’ll leave the country,” he said. “Anyone who can leave the country will leave.”

To contact the reporter on this story: Patrick Gillespie in Buenos Aires at pgillespie29@bloomberg.net

To contact the editors responsible for this story: Alan Crawford at acrawford6@bloomberg.net;Walter Brandimarte at wbrandimarte@bloomberg.net

©2019 Bloomberg L.P.