巴黎银行-新兴市场-宏观策略-阿根廷：大选追踪-20190808-67页.pdf

Please refer to important information at the end of this report ARGENTINA: ELECTION TRACKER SELF-FULFILLING PROPHECIES DEEP DIVE | EMERGING MARKETS RESEARCH August 2019 Felipe Klein, Economist BNP Paribas Sucursal - Buenos Aires Luiz Eduardo Peixoto, Economist BNP Paribas London branch 2 STATE OF PLAY POLLS KEY ISSUES AND POLICY PROPOSALS The results of Sunday’s primary election pose scenarios of self-fulfilling prophecy. A better-than-expected outcome for the current administration could lead to positive short-term dynamics for the economy that would strengthen President Macri’s odds of winning. A negative result, however, could lead to an adverse feedback loop that would increase opposition candidate’s Alberto Fernandez’s probability of winning the first round. In our election tracker we incorporate a guide on how to interpret the primaries, what to watch out for, and look at what this might mean for the markets. Our poll of polls for the primaries, held on 11 August, shows that the gap between Alberto Fernandez and Mauricio Macri has narrowed. President Macri is slightly ahead in a potential run-off scenario, but we flag the increased discrepancy in polls. Macri’s chances may have increased significantly since May, but his probability of winning the primaries is still below 50%, our model shows. We use Google Trends to forecast the Confidence in Government index and then estimate the probability of winning the election based on this index using a probit model. A good performance in Buenos Aires Province (PBA) is key to winning the election. For Macri to be successful, he will need not only to gain ground in the Province, which faces a tight race, but also consolidate the lead in his strongholds. In one exercise, using regional breakdowns in polling data and comparing it with demographics, the president would need around 2 million voters more. Our election tracker is user-friendly, easy to navigate and updated regularly to keep you abreast of developments. CONTENTS KEY MESSAGES 02 03 04 CURRENT CONGRESS PARTIES AND LEADERS 04 04 LINKS TO RECENT PUBLICATIONS 3 STATE OF PLAY BNP Paribas’ guide to Argentina’s Primaries………..4 The Primaries and the economy……………………….5 Primaries vs Actual vote: What’s the difference……...6 Province of Buenos Aires (PBA): background….…….7 Capital-province divide in the 2015 election…….…….8 2019 Election calendar……….………….……………9 National Election Process And Features…………….10 Provincial Elections: General Aspects……….………11 Provincial Elections: Calendar………………….…….12 Provincial Elections: Results…………………….……13 Provincial elections: Details…………………….……..14 Party affiliation of provincial governors……….……15 Key constituencies………………..……….…………..16 BNP PARIBAS’ GUIDE TO ARGENTINA’S 2019 PRIMARIES 4 Sources: Local press based on pollsters, BNP Paribas 05101520253035404550Jan-19Feb-19 Mar-19Apr-19May-19Jun-19Jul-19% of support, by presidential candidate Macri-Pichetto Fernandez-Kirchner Lavagna-Urtubey BNP PARIBAS POLL OF POLLS (% of total)  WATCH OUT FOR…  The Province of Buenos Aires can amplify or mitigate the outcome in the presidential primaries. Winning Buenos Aires is seen as a necessary condition to win the general election as it is home to 40% of the electorate. Buenos Aires Province  Even if the difference between the two candidates is lower than 3pp, markets could react negatively if Fernandez wins more than 40% of the valid votes, given that a candidate can win the first round with 45% of the votes. Proximity to 40%  A greater than 3 to 4pp difference in the number of votes favouring opposition Alberto Fernandez over incumbent Mauricio Macri could be market negative. The difference  The performance of other candidates will help assess Fernandez and Macri’s chances for a potential second round. Supporters of Roberto Lavagna, Jose L. Espert and José G. Centurión are could eventually lean towards Macri, whereas those of Nicolas del Caño could turn to Fernandez. Transfer of votes Alberto Fernandez - Mauricio Macri (difference, in pp of votes) ≤ 3 pp > 3pp Alberto Fernandez % of vote ≥ 40% < 40% See here for polls in the Province of Buenos Aires What are the odds of Macri winning the elections? How do primaries compare to the actual vote? Compare policy proposals Full content Bonus feature: Peronism and Argentina’s political history THE PRIMARIES AND THE ECONOMY 5 BASELINE Difference<3pp & Fernandez>40%, or difference >3pp & Fernandez<40% •Uncertainty would remain high until the end of the year. •FX volatility would prevent a material slowdown in inflation, given the high FX pass-through. •A slower recovery in real wages and higher rates for longer would lead to an L-shaped recovery in economic activity. VICIOUS CYCLE Difference >3pp & Fernandez >40% •Dollarization and capital outflows would increase, hurting the peso and thus renewing concerns about debt dynamics. •This would probably interrupt the ongoing mild economic recovery and fuel inflation through higher FX. •Macri’s public ...