Political Risk Latin America Blog @PolRiskLatam

Latin America exchanges: Andean tie-up

Posted in News and Articles, Political Risk by politicalrisklatam on October 6, 2010

by The Economist Intelligence Unit, October 5th, 2010.

Three Andean exchanges – in Chile, Colombia and Peru – will soon combine their share markets. They plan additional future integration, including of their important bond markets.

After more than a year and a half of talks, the major securities exchanges in Chile, Colombia and Peru are ready to form themselves into a single, unified market. The three exchanges announced in late September that they will take the first step on November 22nd, when they will unite their equity markets. The new market will be the second largest equity platform in Latin America, ahead of Mexico’s Bolsa Mexicana de Valores and behind Brazil’s Bovespa.

The timing is just right. As rich-country markets falter on a slower-than-expected rebound from the economic crisis, investors are looking to fast-growing emerging markets for better returns. Although this new crossborder Andean equity market still does not hold a candle to Brazil, it does give investors a larger target in the region, as well as the simultaneous opportunity to get exposure to three Latin American economies that look very strong coming out of the 2009 recession.

The unification of the equity market is only a first step, provided it is successful, towards fully unifying the three securities markets. A second, more-complex stage will attempt to integrate the debt markets, as well as allow market participants to trade on a crossborder exchange directly, rather than through local brokers.(continue reading… )

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