3/7/2023 - Economy and Finance

The lack of trust as a business

By Horacio Gustavo Ammaturo

The lack of trust as a business

To do well the numbers!!!

Who could think instability would change and inflation represents an excellent business?The inexplicable exchange gaps, which more than an economic measure constitutes a very costly political whim for Argentina as a country, feeds all kinds of speculation, coverage and margins waiting for the inevitable and postponed adjustment with the dollarThat the market is willing to fix double the value of the US currency causes retention in liquidation for those who have it and increase in demand for those who wish. As we expressed in previous articles, neither the U.S. Federal Reserve could sustain a policy that has been so foolish for so long, selling something that many want to half its value.The gap accelerates the inflationary effect, since importers and exporters seek to access the best possible types of changes in their foreign trade operations, whereas, in the internal market, price controls allow it to transfer part of the exchange difference to the price of their products.Meanwhile, all these expressions of approval in overprices and exorbitant costs translate into extraordinary gains for companies.In this opportunity, we will analyse in terms of hard currency, that is, whose purchasing power remains constant in time, the Financial proposals which offer the main creditors for massive consumption in Argentina.For the purposes of fixing references to evaluate the results of investments in this type of operations, we will make the following considerations:

References to consider adjustment to weight by exposure to inflation.

According to the data drawn up by Indec la accumulated inflation During the year 2022 it was of 94.8%. This means that if to make certain purchases on January 1 last year, 100 pesos were necessary, on December 31 had to disburse 194,80.On the exchange rate side, if we consider the evolution of the Official dollar, we started 2022 with a value of 103 pesos per unit and arrived in the last day of December with a quotation of 177 pesos, i.e. an increase of almost the 72%, while with dollar counted by liquidation the tips were 202,13 pesos and 344,13 weights for the beginning and end of the year respectively, which represents a variation of the 70% approximately.We note that the prices of products that make up the inflation rate exceeded more than 200 points for exchange variations, i.e. those prices up more than 30% in dollars During the last year.

Total financial costs per market.

We will consider three markets, banking, formed by banks regulated by the Central Bank of the Republic of Argentina, extrabank, which includes among other hypermarket cards or loans from large household appliance chains and, lastly, the main online sales platform of the region.
  1. Banks, the financing rate of consumption with credit cards, for example, includes two steps, one up to 200,000 pesos that is regulated up to 71.5%, while for higher amounts may exceed the 200% annual. However, in all cases, the total financial cost, adding commissions, account maintenance fees, etc., exceed the 100% annual basis. Banks have the possibility of obtaining public savings, therefore, can put the money their customers receive, which usually pay with rates ranging from 0% to certain non-paid deposits up to 75%, according to the passive rate regulated by the Central Bank which fixes this coverage for certain fixed-term placement rates.
  1. Extrabanks, this sector offers financing alternatives for the purchase of its products, therefore, it is worth considering that, in addition to the financial benefit, it obtains through credit a commercial result. In these cases, annual rates are TNA 115%,TEA 192.5% and CFT 320%.
  1. Online Platforms. In this case, the proposals financed propose to pay 12 quotas a little more than double what it costs to make the purchase in one payment, i.e. each 100 pesos are paid 12 quotas of 17 pesos, reaching a total of 204 pesos each 100. As the payments are monthly, the capital is amortized monthly, i.e. the average placement is six months, because in each payment the balance of the debt per capital will be reduced, as a result, the annual financial cost is between 340% and 350%, depending on whether the payments are made between the 3 and 12 months, respectively.
  1. Change of the dollar during the year 2022.
  2. Total financial cost proposed by each of the suppliers analyzed.
  3. Result is the contribution each proposal had above the exchange rate revaluation.
In this framework, we analyzed the variation that had the exchange rate in weights against average total financial costs for each of the markets analyzed.Evidently, the profitability for lending time weights in Argentina is enormous coming almost to triple “in dollars” the borrowed capital After a year.This means an important transfer of resources from an economy sector, borrowers to lenders.Another fact, not less when analyzing the total financial cost in terms of hard currency, is consumer behaviour.During the last semester there is a substantial change in payment mode, worrying as we are analyzing purchases in proximity supermarkets, i.e. neighborhood warehouses or famous “chinos”.Credit card purchases have increased considerably in the face of cash or debit card payments.This shows that A large part of the population is resorting to the financing of the minimum credit card payment, no longer to buy durable goods or extraordinary services, but for food shopping.If we add that those who access this type of payment means, credit cards, are people who are employed in white or professional and independent traders who declare income, we note that this is a circumstance of the middle income class.La The rule of higher risk of profitability is fulfilled the rajatabla.While the policy takes the background measures to take to add certainty to the economy, companies who can, They take all kinds of coverage, while so much they generate extraordinary recipes waiting for a cordura blow to add greater predictability to the future.Council, make the numbers well, compare prices. Often postpone some purchase a couple of months allows to buy in one payment, without needing to incur in financial costs.Understand that sometimes the financial cost is updated more than twice that inflation will help us rethink how we buy and how we pay.

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horacio gustavo ammaturo

Horacio Gustavo Ammaturo

I am Gustavo Ammaturo. I have a degree in Economics. CEO and Director of infrastructure, energy and telecommunications companies. Founder and mentor of Fintech, DeFi and software development companies. Blockchain Product Designer.

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