For a country’s whose local currency sovereign bonds can yield 60 percent, due to past defaults and a currency that would eat up most of the yield when converted to a hard currency, an interesting analyst’s note has appeared singing the country’s praises.

Investment bank Jeferries did note there can only be a few times in an investor’s life when an index (S&P Merval) collapses 37% on one day while the currency (peso) drops 15%. This came amid news of President Mauricio Macri’s defeat in the Argentinian primary elections by a populist movement wishing to renegotiate or in essence default on IMF loans coming to maturity.

In Jefferies’ words “We feel the markets have over-reacted”.

The analyst feel that  a degree of complacency had built up running into the Primary elections given the recent experiences of the Brexit referendum in 2016 and the Australian general elections this year.

It said the The Argentinian primary elections are designed to narrow the candidates ahead of the real Presidential elections on October 27th. In the end the opposition contender, Alberto Fernandez won 48% of the vote versus 32% for the incumbent Macri. The victory by Fernandez was achieved by the support of opposition Vice-President and former President Cristina Fernandez de Kirchner who had overseen the economy stagnate alongside a fractious relationship with the IMF.

Jefferies backs up its optimistic assessment of Argentina with some interesting stats. It says while export growth has slowed imports have imploded due to the recession and this ought to help the current account improve (-5.2% of GDP FY18 to -1.8% this year, IMF). Secondly, real interest rates are already high. Thirdly, oil prices have dropped back while El Niño is drawing to an end. Fourth, relations with the IMF have improved. Lastly, although FX reserves have slipped back to US$67.9bn in July, this covers almost 9 months of imports and 120% of short-term external debt.

For these reasons, Jefferies is bullish on Argentina’s equity market.