Fears of a return to populism in Argentina intensified on Sunday after Alberto Fernández, the Peronist opposition candidate, won the country’s primary elections by a far wider margin than expected on Sunday.

As Argentines continue to suffer from the fallout caused by a currency crisis last year, Mr Fernández, whose running mate is former president Cristina Fernández de Kirchner, received 47 per cent of the votes, with around 60 per cent of votes counted. 

That compared to just 32.7 per cent for President Mauricio Macri, while former Peronist economy minister Roberto Lavagna came in third place with 8.5 per cent. 

“We are going to create a new Argentina. In that Argentina, there is room for everyone. Finished is the concept of revenge, division,” Mr Fernández told a jubilant gathering of supporters, referring to the high degree of polarisation in Argentine society.

“We were never crazy in government,” he added, referring to the period from 2003-15 when Argentina became a pariah in international markets under Ms Fernández and her husband and predecessor Néstor Kirchner — under whom he served as cabinet chief from 2003 to 2008.

“The markets are going to react badly,” said Ignacio Labaqui, an analyst at Medley Global Advisors, pointing out that Mr Fernández is within reach of a first-round victory in the October elections, with a minimum of 45 per cent of votes required to secure an outright victory.

If no candidate wins outright in the first round — which can also be achieved with at least 40 per cent of votes and a 10-point lead over the runner-up — then a run-off vote would take place in November, although such a scenario now looks less likely.

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“This has been a bad election. We must redouble our efforts tomorrow so that in October we can continue with [our project for] change,” Mr Macri told dejected supporters on Sunday night after his first ever election defeat since turning to politics almost two decades ago. “October could perhaps define the next 30 years for Argentina,” he added. 

Almost all polls had predicted a much closer result between the two leading candidates. With most investors assuming a far better result for the market-friendly government, there are now fears of a sell-off in bond markets on Monday and renewed currency volatility that could further undermine Mr Macri’s re-election prospects by fuelling inflation and putting a sharp end to the economic stability that was regained in recent months. 

Government supporters point out that in the 2015 elections the Peronist candidate Daniel Scioli led Mr Macri by around eight points in the primary elections, with that gap narrowing to just three points in the first round. As no candidate won outright, a run-off vote between the two leading candidates was held, when Mr Macri won by almost 3 points.

There were scenes of jubilation among Peronist supporters around Buenos Aires on Sunday night, with chants of “we’re going to return” heard across the city.

Via Financial Times