Capital Markets
From The Report: Peru 2019
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While the economy has increased three-fold since the turn of the century, capital markets have not proved able to emulate this growth. With trading volumes falling again in 2018, it is clear that markets need to see more dynamic growth in terms of size and liquidity. Efforts to increase penetration should see the high market concentration give way to more diverse participation from individuals and companies of all sizes and sectors. A cornerstones to this will be ensuring the business community and the wider population are made more aware of the financial benefits that capital markets can bring. Looking to the 2020s, question marks remain as to whether Peru will be able to bolster the size and penetration of its capital markets in a way that more closely reflects the scope and dynamism of its economy. This chapter contains an interview with Marco Antonio Zaldívar, Former Chairman, Lima Stock Exchange.

Articles from this Chapter

Overview

Expansion plans: Capital markets need to grow both their size and liquidity to realise their considerable potential
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Peru has become a beacon of macroeconomic stability in Latin America, with top-notch credit ratings and an admirable inflation record. However, while the Lima Stock Exchange (Bolsa de Valores de Lima, BVL) is one of the oldest among Latin America’s major economies, having been founded in 1860, it is also one of the smallest. The development of Peru’s capital markets has not kept pace with the development of the overall economy in recent years. In 2015 index provider MSCI – which international…

Interview

Crucial role: Marco Antonio Zaldívar, Former Chairman, Lima Stock Exchange (Bolsa de Valores de Lima, BVL), on the role of capital markets in the economy
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Interview:Marco Antonio Zaldívar How will the announcement of large-scale mining investments affect capital markets? MARCO ANTONIO ZALDÍVAR: It is important to note that Peruvian capital markets are heavily reliant on external factors, with an emphasis on global metal prices. The overall volume of traded stocks in Lima can usually be correlated to the international price of copper. This is largely due to mining’s crucial role in the local economy, as it accounts for most of our exports…

Analysis

Increased access: Financial education, reduced regulation and lower taxes are possible approaches to expanding capital markets
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Despite solid economic growth and macroeconomic stability, the size and scope of Peru’s capital markets remain limited. As the IMF highlighted in July 2018, domestic capital markets remain shallow and illiquid, and the stock market’s capitalisation as a share of GDP has increased only marginally. High market concentration is partly to blame, and Peru needs to encourage broader participation in its capital markets if it is to advance. Commercial banks carry out around 90% of financial…

Overview

Indexed growth: Inclusion in global indices often results in a greater flow of funds to capital markets, but it is just one aspect of the economic picture
OBG
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The period of easily raising funds from abroad seems to be coming to an end for emerging markets around the world. In the new environment of higher interest rates in the US and increased competition for capital flows, portfolio managers are becoming more selective with where they place their money. One way for developing nations to ensure that their financial markets can continue to attract foreign funds and remain sustainably liquid is by being included in well-regarded benchmark indices. In addition to drawing in fund managers, inclusion on such indices requires specific standards that indicate that the participating countries apply…

Overview

Indexed growth: Inclusion in global indices often results in a greater flow of funds to capital markets, but it is just one aspect of the economic picture
OBG
plus

The period of easily raising funds from abroad seems to be coming to an end for emerging markets around the world. In the new environment of higher interest rates in the US and increased competition for capital flows, portfolio managers are becoming more selective with where they place their money. One way for developing nations to ensure that their financial markets can continue to attract foreign funds and remain sustainably liquid is by being included in well-regarded benchmark indices. In addition to drawing in fund managers, inclusion on such indices requires specific standards that indicate that the participating countries apply…