The decline in local assets, ongoing capital controls, and an economy still avoided by foreign investors are dampening expectations for a surge in Argentina’s capital markets. This situation is affecting small brokerage firms that had anticipated a recovery after President Javier Milei took office two years ago. On September 11, CNV made it clear that companies must report any losses greater than 15 percent of their equity. This rule is designed to prompt recapitalisation if necessary. “We felt it necessary to remind brokers of their duty, as outlined in the regulations,” a CNV spokesperson stated.
Over 10 brokerages, such as Aurum Valores, RIG Valores, Transacciones Agente de Valores, Quant Capital, and Elyca Servicios Globales, quickly reported losses that exceeded that equity limit. Besides possible recapitalisation efforts, the losses might lead to necessary consolidation in the industry. Argentina has around 280 licensed brokers, which is more than Brazil, Mexico, Chile, or Peru, each of which has fewer than 100 registered brokers. “The situation is uncertain, and with big changes in peso interest rates, the industry has not performed well,” said Pablo Repetto. Brokerage losses contribute to a growing sense of negativity in both the financial and political environment for Milei. His disapproval ratings have increased, the economy shrank in the second quarter, and Argentina’s Central Bank stepped into the official currency market on Wednesday for the first time since reaching an agreement with the International Monetary Fund in April. Milei’s opponents in the lower house of Congress turned down two contentious vetoes regarding education and healthcare funding, showing that he does not have strong backing in the legislature ahead of an important midterm election in October.
In its report to the regulator, brokerage Compania General de Valores Mobiliarios stated, “the main reason for this decrease is the drop seen in the securities markets during the first half of 2025, which directly impacted the value of the firm’s investments.” Milei’s arrival in 2023 raised hopes that both local and foreign investments would enhance the country’s business environment and open up new possibilities. Nearly two years into Milei’s administration, capital markets activity has not increased, and competition among brokers is getting stronger. Trading revenues, which reached record levels in 2023, have fallen by over 50 percent at certain firms. Brokers pointed out recent developments, like the disappearing exchange-rate gap that had driven contado con liquidación trades, a legal way for companies to acquire dollars. CCL volumes dropped significantly after officials relaxed capital controls for individuals. Spreads fell sharply and margins disappeared, hitting brokers’ main business hard. The relaxation of capital controls allowed Argentines to purchase dollars directly from banks, resulting in less frequent use of their brokerage accounts.
As of June, the number of investment accounts has dropped by almost 50% to around 1.9 million. The number of brokerages remains the same. Meanwhile, new investments and business opportunities did not appear. “It didn’t go as we thought,” said Pablo Lucero. Feeling sure about his connections with businesses, Lucero started his own company in 2022. He assists small and medium-sized businesses in opening custody accounts and using tools like deferred-payment checks. Milei’s rise to power increased his hopefulness. However, managing the business proved to be more challenging than Lucero expected. “It’s quite challenging to persuade a company to seek financing for expansion or to purchase machinery when activity is low and sales are declining,” he stated.
The forecast for the rest of 2025 is not positive. The government continues to encounter difficulties in stabilizing the peso. High real interest rates, sluggish economic activity, and Milei’s recent electoral loss in Buenos Aires province are making the situation even more complex. “We do not anticipate a recovery this year or the next. It will take time,” Lucero stated.