Investors are displaying newfound confidence in Argentina’s stock market and the country’s future economic prospects.

What Happened: The Global X MSCI Argentina ETF (NYSE:ARGT), a popular exchange-traded fund accessible to U.S.-based investors, soared to $54, marking a historic high since its inception in 2011.

Ever since President Javier Milei‘s election victory on Nov.18, tango stocks tracked by the ARGT have experienced an impressive rally. They surged by more than 25% and headed towards their sixth consecutive week of gains.

This winning streak is the longest seen since December 2018.

On Dec. 21, Milei issued a presidential decree that will likely lead to a wave of privatizations and deregulation efforts.

During a speech at the presidential palace in Buenos Aires, the libertarian President outlined a series of reforms, including the repeal of regulations he says are hindering the privatization of state-owned companies.

He further stated that all state-owned businesses would undergo legal restructuring to pave the way for privatization.

Milei also revealed plans to reduce costs for mining companies that have been drawn to vast deposits in the Andes due to the growing demand for battery metals amid the transition to clean energy.

Also last week, Argentina’s Finance Minister, Luis Caputo, announced a shock-therapy plan involving deep budget cuts and a 54% devaluation of the peso to combat hyperinflation.

Congressional Hurdles: Local newspaper La Nacion reports that the decree for economic deregulation may face opposition in the Argentine Congress, potentially marking the first significant setback for Javier Milei’s administration.

This development has sparked strong resistance among parliamentary factions, raising the possibility of an unprecedented and historic scenario. Until now, no Decree of Necessity and Urgency (DNU) has been declared invalid by both chambers.

Milei’s party lacks a majority in both chambers of Congress. This necessitates the cooperation and acceptance of his reforms by other political parties.

Why It Matters: The surge in Argentine stocks has largely depended on investor expectations regarding the far-reaching economic reforms advocated by Milei.

Should the Argentine Congress impede these reforms, the initial promise of Milei’s presidency could lose its luster.

Notably, the state-owned Argentine energy giant, YPF Sociedad Anonima, witnessed a spectacular rally of over 70% in the week following Milei’s election triumph. Nevertheless, its performance has remained stagnant since.

For now, the market eagerly awaits tangible actions to match the lofty rhetoric, reigniting the optimism surrounding Tango stocks and their potential to dance unhindered.

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