Hugo Chavez. Opalesque Industry Update – The stock markets of Chile, Columbia and Peru officially merge on Monday to capitalize on demand for “emerging” Latin America. The move also effectively creates the second largest bourse in the region, various media reports said.
But more significantly, the alliance of the stock markets of the three right-leaning nations that spans most of South America's Pacific coast, is seen to provide investors wider exposure to assets linked to the region’s natural resources and its rising middle class.
The Mercados Integrados LatinoAmericanos exchange (MILA) will commence operations on May 30th. According to Bruno Del Alma, Chief Executive of exchange-traded fund firm Global X Funds, the new stock exchange merged together three countries that “really are the emerging part market of Latin America.”
Del Alma said MILA, “was a big factor in terms of us thinking about the region, but it underpins a much broader story about both the growth rates and growing political and economic integration across those three market,” MarketWatch reported.
Indeed, the integrated markets represent three of the most vital economies in Latin America. Peru and Chile are expected to register the fastest rates of economic growth in Latin America for 2011. Data from the International Monetary Fund forecasted Peru's economy to expand at a rate of 7.5% and Chile’s at 5.9%. The IMF expects the countries to lead growth in Latin America in 2012. Peru's primary export is gold while Chile is the largest copper producer in the world.
Despite having the smallest market share in MILA, Peru is expected to dictate the success of the newly-created stock exchange in the coming months, analysts predicted.
Also, the merged stock exchange may present a challenge to another regional grouping, the Bolivirian Alliance, led by left-wing leader Venezuelan President Hugo Chavez.
Sebastian Geuvara of research firm Ipsos Consultaria which is based in Lima said, “There's a clear difference in policy organization in this group of countries… There's a conscious effort to encourage integration between these like-minded countries.”