Shares in Argentina's YPF soar as Milei hints at privatization

BUENOS AIRES (Reuters) - New York-traded shares in Argentine state-run oil company YPF soared more than 40% on Monday after President-elect Javier Milei said he would seek to privatize the firm.

The libertarian economist, who defeated Economy Minister Sergio Massa to win the presidential election on Sunday, said YPF was one of several state-controlled companies he plans to sell in order to reduce the state's share in the market and improve public accounts.

Milei, who will take office on Dec. 10, said in a radio interview he expects his government to "create value" for the companies "so they can be sold in a very beneficial way for Argentines".

The South American country nationalized 51% of the oil company more than a decade ago from Spain's Repsol.

YPF is Argentina's largest oil firm and oversees development of Vaca Muerta, the world's second-largest shale gas reserve and fourth-largest shale oil reserve.

Shares of YPF jumped more than 40% early in the session, before paring some gains to trade up 35.2%.

Argentina's markets were closed on Monday for a holiday but Argentina-related equities, as well as its dollar bonds, saw a major rally overseas after Milei's triumph.

Global X analyst Trevor Yates said the YPF gains were related to the increasing likelihood of it being privatized and implementing an international price parity policy.

A lower risk premium in the country, Yates added, should also reduce its cost of capital and favor output in the medium and long term.

YPF reported $137 million in losses in the third quarter, swinging back from a $693 million profit a year earlier, hurt by lower local fuel prices and higher operating costs.

A source within Milei's team, who asked not to be identified, said: "We are still trying to see all the businesses or activities where YPF participates and which ones it should be concentrated on. But we are still in a preliminary stage."

(Reporting by Eliana Raszewski; Additional reporting by Bansari Mayu Kamdar; editing by Grant McCool)