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Three-nation stock exchange deal agreed

Sept. 30, 2010 at 5:29 PM   |   Comments

SANTIAGO, Chile, Sept. 30 (UPI) -- Three of Latin America's emerging economies agreed to integrate their stock exchange operations as part of a strategy to draw investors to the region.

Of the three -- Chile, Colombia and Peru -- so far the Chileans have demonstrated most connectivity -- for which they paid a heavy price when the 2008 economic downturn hit the financial markets in the country.

Chile's economy was further hit when a magnitude 8.8 earthquake struck parts of the country's manufacturing regions in February.

Undeterred, Chile and its partners Colombia and Peru joined hands in an ambitious project that will be pursued independent of the Mercosur trade bloc, in which all three nations have associate membership.

Mercosur is in talks with the European Union to secure a deal that will grant member countries access to EU markets. A Mercosur-EU deal will also open the South American region to stiff competition.

Plans for the integrated stock market demonstrated renewed economic confidence following early signs of recovery in Chile, Colombia and Peru.

Officials said integrated operations would begin as early as Nov. 22 -- a date that took analysts by surprise. Officials are busy with technological preparations to bring about a smooth integration of share trading operations.

If all goes to plan by that date, officials said, investors in Peru would be able to buy shares in Chilean and Colombian companies. Chile and Colombia haven't announced details of how they plan to open the trading.

Officials said the diversity of the corporate sectors in the three countries promised to boost share trading. More than half of the Peruvian share market is dominated by mining industries while manufacturing represents Colombia's largest sector. Chile's advanced financial markets represent a mixture of mining, manufacturing and service industries.

Officials cited early estimates that combined stock market operations could reach $300 million a day.

Officials expect an integrated market to lead to the creation of a common market and surpass Mexico in terms of market value. When combined the markets could represent about half of the market value of Brazil's publicly traded companies, officials said.

The integration of the stock markets of Chile, Colombia and Peru is the latest of ambitious projects that have followed the European model in one form or another.

Mercosur, the continent's largest trade bloc, includes Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Paraguay, Peru and Uruguay and is likely to be joined by Venezuela.

Mercosur has a combined gross domestic product of $2.9 trillion and income per capita of $10,858.

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