MILA Eyeing Mexico, Panama and Fixed-Income

Despite low volumes and a postponed Lima-Bogota Bolsa merger, exchange officials from the Mercado Integrado Latinamericano (MILA) markets see tie-ups with Mexico and Panama in the medium-term, as well as fixed-income cross-listing. “The two potential names are Mexico and Panama,” says Francis Stenning, CEO of the Bolsa de Valores de Lima. He notes Panama has shown the most interest. The next 5 years will be dedicated to improving the cross-listing platform and expanding to other countries, he adds. Thereafter MILA could focus on full exchange integration, and adding fixed-income cross-listings. There should also be room to develop additional products. “We would like to develop futures attached to MILA products,” says Maria Jose Ramirez, vp of the Bolsa de Valores de Colombia. Such products may not generate high volumes, but they should lure foreign investors, which is the true goal of the platform launched in March, Stenning says. Activity has been low so far, but it is hoped the Andean economies continue to remain isolated from global troubles and attract more outside funds. “Asia’s transformational growth story should continue,” even if events in Europe worsen, a particularly positive scenario for the Andean countries, says Jason Press, equity strategist at Citi. He notes a disconnect, in that global equities have priced in a global recession, while commodity prices are reflecting expectations of EM growth. Citi finds the latter to be the more accurate of the two scenarios. Peru, the highest beta among the three MILA markets, would see the most upswing, with Peruvian banks and mining companies such as Southern Copper particularly well-positioned. However, Peru would also be the most vulnerable to a double-dip. Stenning, Ramirez and Press spoke at a conference organized by Bloomberg Thursday in New York.