Argentina, Panama May Join Combined Latin American Exchange, Hoyle Says
Argentina may join a combined Latin American securities exchange to compete for investors, said the head of Peru’s main stock exchange.
Panama also could become part of the planned integrated exchange, Lima Stock Exchange President Roberto Hoyle said yesterday in a telephone interview from Lima.
Chile, Peru and Colombia aim to start a system of cross- border transactions in stocks such as Cencosud SA, Southern Copper Corp. and Ecopetrol SA from Nov. 22, he said. In a second phase, the three exchanges plan to establish a common market by the end of next year that would surpass Mexico in terms of combined market value and narrow the gap with Brazil, as well as incorporating securities such as bonds.
“Panama has shown interest, but the three countries decided to go with the current model as they’ve made more progress adopting similar regulatory policies,” Hoyle said. “When the Argentine market recovers, the Merval could join the integrated market to compete with Brazil’s Bovespa.”
The combined market value of publicly traded companies in Chile, Colombia and Peru is $592 billion, compared with Mexico’s $420 billion and Brazil’s $1.29 trillion, according to Bloomberg data.
MSCI Inc. removed Argentina from its benchmark emerging- market index in June 2009, assigning it frontier status, citing requirements for international investors to deposit 30 percent of the funds they bring into Argentina for a year.
Capital Controls
Buenos Aires Stock Exchange President Adelmo Gabbi said in a June 15 interview that authorities may lift capital controls. He didn’t return a telephone message left with an assistant today.
“Any kind of association, specially for such a small market like Argentina’s, will definitely be positive for the stock market,” Jose Maria Aristi, who helps manage $280 million for Standard Investments, said today in a telephone interview from Buenos Aires.
While greater choice will benefit investors, Peru may not be as competitive as Chile and Colombia because of its capital gains tax, Jose Luis Bustamante, head of trading at Cartisa SAB, said in a telephone interview yesterday from Lima.
Peru’s government needs to make it simpler for the country’s 24 brokerages to pay the 5 percent tax through the exchange instead of individually filing returns, Hoyle said.
“The Lima Index has grown 24 percent over the past two months, so it’s shown it can absorb the tax,” Hoyle said. “We just need greater clarity.”
The integrated market will also spur the sale of local corporate debt to compete with greater availability of bonds in Colombia and Chile, Hoyle said.
Peru sold $1.7 billion in corporate debt last year, compared with $7.5 billion in Chile and $7 billion in Colombia, according to Bloomberg data and the exchanges.
The Lima General Index rose for a sixth session, gaining 1.2 percent to 17,367.60 at 4 p.m. New York time.
To contact the reporter on this story: Alex Emery in Lima at aemery1@bloomberg.net.
To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net