Argentina’s benchmark stock index tumbled a record 48% on Monday, as President Mauricio Macri suffered a humiliating defeat in primary elections over the weekend.
As the S&P Merval Index fell, so did the Peso, which decreased 15% in value against the US dollar.
According to Bloomberg, the 48% drop in the index in a single day is the biggest fall for any market since 1950.
The stock market crash will no doubt dry up liquidity in the financial system, leaving the country to teeter on the brink of another financial crisis.
Although the primary is designed to choose candidates for the presidential election scheduled for October this year, investors look convinced that Macri will not be re-elected.
Investors had expected Macri to finish neck-and-neck against the opposition party candidate Alberto Fernandez, but Macri lost by a margin of 47% to 32. This wider-than-expected margin of defeat sent the markets reeling.
The South American country has more than US$15 billion in debt payments due this year. With the economy in doldrums, there is also a growing concern that it may default on its debt payments.
In addition, investors are scared of seeing former president Cristina Fernandez return to power. She is the running mate of Alberto Fernandez.
Many economists blame her socialist policies for the economic mess that Macri is struggling to clean up.