REUTERS/Marcos Brindicci

Argentina is on the brink of financial crisis after a shocking primary election saw President Mauricio Macri lose to Alberto Fernandez and his running mate, former president Cristina Fernandez de Kirschner.

The S&P Merval Index plummeted 48% Monday, the second-largest single-day drop for any stock market since 1950.

The Argentine peso fell 15% against the US dollar Monday, and extended losses on Tuesday.

Investors are worried that Argentina will default on its debt again.

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Argentina is teetering on the brink of a financial crisis after its current leader, President Mauricio Macri, was defeated by a left-wing opponent in the country's primary elections over the weekend by a greater than expected margin.

The stunning loss sent Argentine markets reeling. The S&P Merval Index plummeted 48% Monday, the second-largest single-day drop in any global stock market since 1950, according to Bloomberg. The Argentine peso also declined, losing 15% of its value against the US dollar Monday and falling further Tuesday to a new low.

Investors fear that if Macri doesn't win a second term in October, the opposing team of left-leaning Alberto Fernández and his running mate — the former leader Cristina Fernández de Kirchner — will undo the progress Macri has made to regain the trust of investors in Argentina and abroad.

The conservative leader ran on a campaign of austerity for the nation and secured a record $56 billion bailout from the International Monetary Fund in 2018. If Macri loses, Fernandez may attempt to renegotiate Argentina's debts with the IMF.

Argentina has billions of dollars of foreign-currency debt due over the next year, according to Bloomberg — $15.9 billion in debt payments is due in 2019, and another $18.6 billion in bond principal, loans and interest payments.

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In the primary over the weekend, Macri took home only 32% of the vote, while Fernandez won 47%. The 15-point lead was much larger than investors had expected, Bloomberg reported.

Investors are now fleeing the country's assets in hoards, leading industry watchers to question if default is on the horizon. The country has struggled with fiscal policy for years and has defaulted before — once in 2001 and again in 2014, under then-president Fernandez de Kirchner.

On Monday, credit-default swaps indicated that traders were pricing a 75% chance that Argentina will suspend debt payments in the next five years, up from a 49% chance that was priced in on Friday, Bloomberg reported. Government bonds tumbled 25% on average, with some prices falling to as low as 55 cents on the dollar, according to Bloomberg.

Even Argentina's 100 year bonds sank to a new low. The 100-year government bond was issued roughly 2 years ago for $90 with a rate of 7.125%, according to Bank of America Merrill Lynch.

Macri still hopes to reverse the result in October. In a press conference Monday, he said that his economic team is working to address voter concerns about the economy, but that the market selloff shows that there isn't widespread confidence in his opposition, Bloomberg reported.

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