The consultant First published a report stating that Argentinian companies are worth up to 50% less than companies in other countries of the region. The report shows financial estimations for the country during 2015 and says that the scenery could be used to encourage merging and acquisition operations.

Miguel Ángel Arrigoni, director of the firm, said that the situation is not so negative, as there is great “growth potential” implied for Argentina. Because of its’ human and natural resources, Argentina is a candidate to complete its’ development, particularly in infrastructure, mining, agribusiness and energy, among other sectors”, said Arrigoni to La Nación.

Nevertheless, the report claims that in order to reach these benefits, certain requisites must be established first, such as an Act that protects foreign investment, improving “factors such as international reputation and image, which involves going through official statistics and dealing with external investors.”

The country’s debt is “low and manageable” when related to the GDP. Therefore, there is a favourable potential for the national economy “as long as the holdouts and Ciadi’s problems are solved in order to return to the markets”. First considers that these negotiations “will not be easy and will demand time”.

THE ADVANTAGES

Another key point for 2015 to be a year for the local financial market to grow is that the total amount of the funds gained through external indebt go to infrastructure work. And it outlines that: “Argentina needs to become friends with investment and return to international markets”.

On the other hand, the report states that, even though the country has a quite solid financial sector, it is small when compared to other nations. Bank credit in countries such as the United States or Japan represent over 160% of their GDP, while in Latin America is smaller. In Brazil, for example, it is of 70% and in Argentina of 16%.

Another factor the report mentions is the Latin American banks have better solvency indexes than their fellows in Europe. In those banks there are larger levels of assets’ concentration from the main banks of each country, plus smaller capitalization in banks of greater risk.

Moreover, First estimates that the high levels of national debt in certain European countries makes their financial systems more vulnerable.

The report considers that what may look as a disadvantage for the Argentinian financial system may become the base of its success. That is the case for the country’s capital market. When measured from a stock-market perspective and volume of negotiations, is small, but has “great development potential”, if the chance comes for companies seizing the up side “that will eventually occur in Argentina”.

A major prevention of the report is the reminder of the years’ prior de 2008-2009 crisis, when in a liquidity world context “countries with high levels of risk, such as Greece, Italy, Spain and Ireland launched instruments to the market at 4%, 5% or even lower rates”. It has compared that situation with the current situation Bolivia, Paraguay and Peru are living.

This article was originally published by La Nación