U.S. President Donald Trump and first lady Melania Trump (L) welcome President Mauricio Macri of Argentina and the first lady of Argentina, Juliana Awada (R), to the White House shortly before meeting in the Oval Office April 27, 2017 in Washington, DC. Win McNamee | Getty Images

Donald Trump and Argentina's President Mauricio Macri didn't get off to the most auspicious start: According to a book by Macri's father, the 45th U.S. president once broke Macri's golf clubs over his legs, one by one. But depending on one's politics, Argentina's president resembles his American counterpart, at least in the sense that each is a former real estate developer who promised an economic boost and presided over a big stock rally in 2017. But, sorry Donald, Mauricio's was bigger. Bigly bigger. "Argentina is becoming the rising star in the whole [South American] region, and that is because of the change in politics and economics from President Macri," said Alfredo Coutino, an economist at Moody's Analytics. "The free-market model is something Argentina was missing." Argentina's benchmark stock index rose 77 percent last year. The key was a series of fundamental reforms to make the economy more free-market-oriented, which investors and lenders have cheered. The emergence of smaller technology and energy companies that bolster Argentina's traditional strength in agriculture has also led to additional market gains. But can it last? Like Trump, Macri is a real estate developer with a rich father who set out to turn his country's economy around. But his challenge was not to implement populist measures, but to reverse decades of populism dating to strongman Juan Peron, first elected president in 1946. From here the path of the Merval, the primary Argentine stock market index, will turn on whether Macri's shift in politics proves to be the right approach.

Getting rid of populist price controls

Back when Macri took office in 2015, Argentina was heading into a recession. Its economy shrank 2.2 percent in 2016. But the Merval jumped 45 percent as investors bought into the beginnings of Macri's reform plans. They were right. Macri reversed capital controls imposed by his two predecessors and eliminated popular, populist price controls on food and gasoline. Those policies, among others, had trapped Argentina into perennially tough access to much needed foreign capital, Coutino said.

A trader works on the floor of the Buenos Aires Stock Exchange in Buenos Aires, Argentina Diego Giudice | Bloomberg | Getty Images

"Policy changes have put the economy on a stronger footing and eliminated most of the most urgent macroeconomic imbalances," the IMF said. "Progress on supply-side reforms will support growth, raise productivity, incentivize private investment and erode some of the currency overvaluation. Reforms will need to make sure that the benefits from stronger growth extend to all parts of society, lowering poverty, improving job quality and reducing [participation in the off-the-books economy], particularly for the young and for women." A midterm election last October consolidated Macri's control, which is positive for Argentine stocks, said Verena Wachnitz, manager of the $683 million T. Rowe Price Latin America Fund, which has gained 30 percent in the last year. While undoing the capital controls brought a wave in new commitments from companies in 2015, a 2016 dip in investments makes it unclear how quickly companies are following through on those promises.

Argentina's stock market diversifies