Argentines will vote on Sunday in the last stage of a presidential election between a far-right outsider and the ruling party’s left-leaning economy minister, a tight race that is keeping investors on the sidelines as they try to figure out what could happen next.

The latest polls suggest that Javier Milei of the La Libertad Avanza libertarian party could clinch the presidency. Polling by CB Consultora and Proyección Consultores, both of which correctly predicted Economy Minister Sergio Massa of the left-of-center Peronist Party would get the most votes in the October 22 first round, found that Milei could beat Massa by two to three percentage points.

Others have come to the same conclusion, while Clivajes Consultores and Zuban Córdoba y Asociados are among the few predicting a narrow win by Massa.

The uncertainty surrounding the result and the intentions of the winning candidate, have left many investors sitting on the fence.

Sebastián Maril, CEO of financial research company and advisory firm Latam Advisors, said investors are not really buying or selling.

“It’s cheap to buy, but investors fear that they will lose a few points if the results are not what they expect,” he told LatinFinance. “It’s not wait-and-see: It’s that they haven’t decided what to do yet.”

KEY SIGNALS

Investors will be watching the winning candidate’s initial announcements to gauge the direction of their policies and their own investment decisions.

“Massa will take a step-by-step, day-by-day approach to find what works without offending anybody, be it the markets, unions, social classes or executives,” Maril said. “Milei, on the other hand, knows that what he has to do is going to offend everybody but that this is what he has to do for Argentina.”

Investors are not paying much attention to the soundbites that have been making headlines in the Argentine press. Many suspect that Massa will have a pro-market discourse with the markets about cutting inflation and interest rates and peeling back regulations, but then he will do the opposite at home.

“This is Massa, and Wall Street knows it,” he said.

Argentina’s Merval blue-chip stock index has been relatively stable since a 19% plunge after the October vote. The index slid steadily this week to end at 602,278 on Thursday but is still up from the most recent low of 579,150 on October 31 and 207,054 at the start of this year.

Carlos Germano, a political analyst in Buenos Aires, said that if Milei wins, investors will focus on his victory speech for signs that he will maintain the more moderate leaning he’s adopted since the general election or if he will return to his more eccentric bent calling for radical changes. Investors will also monitor who he picks for key posts, in particular his economy minister, for signs of this as well, he added.

“If the speech is more radical, there could be volatility in the markets,” Germano said.

Massa, on the other hand, is expected to continue with his strategy of shifting more to the center — and away from the far-left politics of Vice President Cristina Fernández de Kirchner, who has lost popularity since her two terms as president from 2007 to 2015.

“Kirchnerism will be just another partner, but not the main partner,” Germano added.

ANTI-VOTES

Will Milei pull it off, as many polls suggest?

Juan Cruz Díaz, a managing director of Cefeidas Group, an international advisory firm in Buenos Aires, expects Milei will win on the day. He argues that many of the people who voted for Patricia Bullrich, a right-of-center candidate knocked out of the race with 24% of the ballots in the October vote, will pick Milei. These voters may not like the flamboyant libertarian, but they like Massa and Peronism, a party that has ruled for much of the past 80 years, even less.

To win over these voters and the 8% to 9% who are thought to be undecided, Massa has been running what Milei has called a “fear campaign” by saying that the price of gas, power and public transport will surge under the libertarian, and public education and health will suffer.

This fear-mongering is thought to have helped Massa win the first round with 37% of the votes versus 30% for Milei, sending it to the runoff. The fear campaign, however, may backfire for Massa.

Germano said Massa’s attacks on Milei during the final presidential debate on November 12 may have won him the bout in the eyes of most political pundits and the media, but he came across as overly aggressive and antagonistic.

“In politics, acting is good, but overacting is very bad,” he said.

Milei, by comparison, was seen as the victim, the underdog, and this won him support of many observers commenting on social media, he said. The debate was widely watched, with a 48% rating, just shy of the 54% viewership of the World Cup final that Argentina won last year.

CONTINUITY OR CHANGE?

Massa’s fear campaign also appears to have turned some of the electorate against him at a time when they want change. The economy minister, Germano said, is creating a sensation that if he doesn’t win, it will be a calamity for Argentina when the country “is already living a tragedy.”

The economy is a recession, with the peso steadily devaluing, inflation touching 143% and the benchmark interest rate at 133%, the highest in the world.

Germano said that for much of the electorate the vote is a choice between the continuity of this or a change.

What happens after the election is largely uncertain. A big concern is if Milei can actually govern. After his second-place finish in the general election, he was endorsed by Bullrich and former President Mauricio Macri, both of the same right-leaning party. This likely means that Milei will have to incorporate some of them into his administration along with his conservative, liberal and libertarian supporters.

Without a traditional party structure, it will be hard to bring them all together, Cefeidas’ Díaz warned.

Massa, by comparison, has a party structure to corral the different factions of Peronism, and the concerns about Milei’s governability could clinch the election for him, he added.

Nonetheless, whoever wins won’t have much time to prove to a skeptical population that they have a plan to pull the economy out of the crisis.

“There’s not much patience in society right now,” Díaz said.

[PHOTO: Argentine presidential candidate Javier Milei speaks at a rally. Credit: La Libertad Avanza.]