Between July and September 2024, the volume traded in the Asunción Stock Exchange (BVA) totaled G. 13.2 billion (around USD 1.7 billion). This amount continues to exceed previous quarters, but the expansion in the stock market is reduced when considering the same period last year.
On the other hand, the Mutual Funds are going through a period of incessant expansion and as of the ninth month of the year they manage assets of G. 5.9 trillion, according to records of the Superintendency of Securities.
The Asunción Stock Exchange (BVA) reported transactions for G. 34.9 billion (approximately USD 4,644 million) up to September 2024, maintaining a growth rate of 40% with respect to the values recorded for the same period last year.
With still three months to go before the end of the year, the accumulated volume of operations is only G. 2.1 trillion away from the total number of stock market operations concluded in 2023. Considering that the average number of transactions per month has been G. 3.8 trillion, it is expected that by the end of December next year the volume of transactions will be higher than last year.
Specifically, the third quarter of this year saw an expansion of 33.1% in stock exchange business volumes compared to the third quarter of 2023, totaling G. 13.2 trillion (USD 1,719 million).
Although this growth rate continues to be high, it marks a deceleration from the levels observed in previous quarters, with a year-on-year increase of 55.2% in the second quarter and 36.6% in the first quarter.
The variations for each month of the year also show less momentum. For example, after doubling the volume of operations in April compared to the fourth month of 2023, growth was only 20% in September.
Although last April's dynamism can be considered extraordinary, it should be noted that February, March and July saw year-on-year increases in operations of around 40%; while in May, June and August, the level was above 30%.
September is thus positioned as the month with the lowest level of year-on-year growth in transactions observed in a month in 2024, for the time being. Transactions in the ninth month of the year totaled G. 3.5 trillion (or USD 457 million) and were 28.1% lower than in August.
Trading volume per month - January to September 2024
Figures in billions of guaraníes
Source: Asunción Stock Exchange
When analyzing the dynamism by market, it can be observed that the third quarter marked different evolutions for securities issuance operations and negotiations of previously issued securities.
The primary market obtained a significant increase in volumes during the July-September 2024 period, totaling G. 1.5 trillion and registering an expansion of 38.1% with respect to the third quarter of 2023. In previous quarters, this market had been registering drops of 52% and 18%, and trading volumes of around G. 900 billion in each case.
The secondary market, on the other hand, had its slowest quarterly growth so far this year between July and September, at 32.6%, after having increased its trading volumes by 87% and 47.4% in the second and first quarters of the year, respectively, on a year-on-year basis.
The amount, however, increased with respect to previous quarters and reached G. 11.6 trillion, so we note that the deceleration was influenced by the comparison with a third quarter of 2023 that was much more dynamic than previous periods.
The slowdown in volume growth in trading volumes is sustained in the case of the secondary market throughout the third quarter of the year, as from the year-on-year expansion level of 78.1% recorded in June, it declined to a rate of 16% in September.
In the primary market, performance was more volatile in the period analyzed, with year-on-year increases of 56.5% and 66% reported in July and September, respectively, while in August it was 1.4%.
Thus, so far this year, the most dynamic month for the primary market was July, with a trading volume of G. 740,143 million, while for the secondary market it was August, with G. 4.5 trillion.
Transactions by month and market January to September 2024
Figures in billions of guaranies
Source: Asunción Stock Exchange
With these results, the securities issuance market accumulated a drop of 18.5% up to September 2024, thus slowing the intensity of the 39% reduction recorded at the end of the first half of the year.
On the other hand, the secondary market's year-on-year growth rate has been declining, from 68% in the first half of the year to 52.3% at the end of September.
From January to September, the primary market thus accounted for 90% of stock market transactions, up from 83% in the same period last year.
Impact of the rise of the dollar on the stock market
Economist Elías Gelay, president of CADIEM, explains that the rise in the exchange rate had a certain effect on this slowdown in the secondary market, due to the fact that investors explored instruments abroad in view of the higher returns offered by securities in dollars, in addition to the reduced availability of instruments in this currency in the local market.
"This change in the quotation of the dollar also caused many investors to exit from positions in guaraníes and move to positions in dollars; and in dollars there are investments at a local level, but also at an international level. This affected the dynamics of the local market, we saw a change in the attitude of investors with this increase in the most accelerated quotation from July until now", says Gelay.
After starting the year with an average quotation of G. 7,280, according to the Central Bank of Paraguay (BCP), it rose to G. 7,539 by the end of the first half of the year, and by September it was already close to G. 7,800.
According to Elías Gelay's analysis, these conditions generate a greater incentive for investment positioning in dollars, but a greater convenience for indebtedness in guaraníes, which in turn discourages the availability of instruments in the U.S. currency.
Regarding the outlook for the last three months of the year, he considers that the primary market will gain strength, both from the issues that were pending in previous months and those that will be structured after the incentive of the interest rate reduction that is being propitiated from the United States and the projections of a slight decline in the value of the dollar.
"This third quarter we missed some issues that were about to come out, I believe that they will be presented now in the last quarter, that is to say that the market will recover. In this last quarter there are many projects that are going to come out and many issues are going to come back," he predicts.
The US Federal Reserve (FED) cut its interest rates in September, by 50 basis points, to a range of 4.75% to 5%, and it is expected to cut them further during the remainder of the year. CADIEM's president sees this outlook as positive for bond issuance in the coming months.
"It will be positive because when rates go down, better financing conditions are generated for companies, which will attract more interest from companies in financing projects. We hope that with this drop in FED rates, perhaps companies will also be interested in issuing locally in dollars, as long as the stability of our exchange rate is maintained", he concludes.
Characteristics of the Paraguayan stock market
Regarding the operations registered by the BVA distributed by currencies, the guarani maintains a greater preponderance against the dollar, with a participation of 60% in 2024 negotiations, unchanged with respect to a year ago. Bonds maintain an ample majority among the instruments traded, with a participation of 98% in the ninth month of the year.
Sites of interest:
CADIEM Casa de Bolsa
CADIEM Administradora de Fondos
Asunción Stock Exchange
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