Alert in the financial sector: they warn of a negative impact if the stocks are lifted

One of the emergencies of the Argentine economy is the lifting of the stocks. President Javier Milei He had set a date in the past (June) to carry out this objective, only to later slip that, first, some issues had to be resolved. Something that was confirmed by the head of the Treasury Palace, Luis Caputo, on his last tour of the United States when asked about the dismantling of exchange restrictions.

Fruit of the exchange rate a sector proliferated that increased almost 100% in a decade (98.4%): these are the Settlement and Clearing Agents (ALyCs), brokerage houses and financial brokers, which are nothing more and fulfill nothing less than the role of intermediaries between investors or companies and the markets.

From Argentine Stock Exchanges and Markets (BYMA) confirmed to Ambit that, since 2014, the Settlement Agents have grown steadily. For example, so far in 2024, the same number of ALyCs have come to market as in all of 2023. However, with an eventual lifting of exchange restrictions, Many of these companies would disappear or be absorbed by the city’s big players.

The warning: why ALYCs are at risk

And in recent years the AlyCs have multiplied dedicated to operating MEP and CCL dollars. The fact is that with the current restrictions, the channeling of foreign exchange demand focused on maintaining a high ceiling. If the trap is lifted, Uncertainty arises about the role that these market actors will play.since it is likely that the official window will take the central role in currency operations, relegating the LACs to a more peripheral role, especially in foreign-related operations.

“This would force several agents to adapt or otherwise disappear“, analyzes the economist Federico Glustein in dialogue with this medium. The complexity of the matter lies in the fact that almost automatic profitability is based on the spread, that is, in the difference between the purchase and sale of the bond, for example when making MEP. Currently, the difference is around $35, that amount remains in the hands of the ALyC. However, once the stocks were lifted, this source of income would disappearhe maintains.

The boom of the AlyCs

Santiago Lopez Alfaropresident of Patente de Valores, explains that, because of the stocks, and “especially with restrictions on importers”, many of them chose to place their money in the LACs to buy assets permitted by the regulation. This raised a business boom for those actors From the market “In addition to what surgery is with MEP and CCL”.

López Alfaro indicates that all these years have been good in terms of operation for brokerage companies, but “the moment they remove all those restrictions,” a market of almost 300 ALyCs “it would be oversized.” It happens that the stocks for importers, for the general public and the operations of both MEP and CCL, boosted business for that sector.

So things are, López Alfaro emphasizes that the moment they lift the stocks, operations such as international and national transfers in dollars will pass to the banks, while for the LACs there will be less business. It is like this, “it is unavoidable“, sanctions.

ALyCs and stocks: the scenario is not so chaotic

For its part, Federico Victoriocofounder of Andean Investments (IA) comments that the scenario It is not so chaotic, neither for the exit from the stocks, nor for the market actors. “We believe that these flexibilities can bring about a mutation in the business, but we are very far from thinking about a disappearance of participants in this sector.”

Victorio outlines that “Without a doubt” the business of the ALyCs can go from being more exchange-oriented (as it was in the last four years with a lot of buying and selling of the MEP and CCL dollars), to a model more similar to the one they have in other countries, that is, “more focused on the assembly of investment portfolios, primary corporate debt tenders and IPOs of new companies, or capital increases of existing companies.”

The AI ​​analyst maintains that “surely” the majority of ALyCs have research departments that already invest in adaptation to the digital world, “Therefore, this change in business model should not affect them, as it did not harm them during the period from 2015 to 2019, in which there were no stocks. and there were many businesses, such as the official dollar cheaper than in the bank, LECAP, LETES, bonds and a stock market with a lot of volume.

In short for Victorio, the “standardization” of the financial market is a reason to celebrate, since it is a very efficient resource allocation tool. The strategist considers that there is a lot of capital market to develop in Argentina, where the percentage of client accounts vs. the total populationIt is very low compared to the rest of the world”.

A reality still distant: the end of the stocks

This being the case, we will first have to get out of the trap to see what happens with the surplus of market players. From the outset, the city “buys” that the path is the correct one and, as Victorio explains, it would be a gradual process and, little by little, They will gradually lift restrictions on both financial dollars (MEP and CCL) and on the MULC. It’s not from one day to the next.

To close, and very much in line with what Victorio proposed, the Consultant 1816 maintains in its latest report: “we recognize that the Government might want to surprise with the timing, to get ahead of investors.” In other words, they say that “We have as a base scenario the gradual exit from the stocksbut it is difficult to have a firm conviction on the subject.” The truth is that, if Caputo and team wanted to lift all controls in May/June, They would also have incentives to try to convince the market that the process is going to be gradual. “so that the private sector does not anticipate the process by dollarizing portfolios and postponing the liquidation of exports.”