Investors call for increased integration
LatAm economies must come together to attract more foreign investment, panelists say at the 11th Andean and Investment Forum
Latin America's economies stand to gain from increased
integration, building on the lessons learned from the Pacific
Alliance and its MILA trading platform, panelists said at
LatinFinance's 11th Andean Finance & Investment
Forum in Cartagena on Thursday.
"We have behaved badly as countries in the region," said
Roberto Belchior, director for market development in Latin
America for the Brazilian stock exchange B3. "There is no way
Latin American countries will get on investor radars unless we
behave as a region. I mean from Mexico to Patagonia."
Latin America requires massive infrastructure investments in
the coming years but it cannot rely on local capital to do it
alone, Belchior said as an example.
"We are good at exporting wealth to other regions... but not
as good at attracting wealth to the region," he said. "First
and foremost, we have got to put the Atlantic and the Pacific
Belchior called MILA a "great idea" but added that capital
flows have not materialized. Momentum is building, however, and
B3 and other stock markets in the region are creating
instruments to increase the flow of capital, such as passport
funds and Latin depositary receipts.
B3, the result of the merger
between BM&FBovespa and Cetip, owns equity stakes in stock
markets in Chile, Colombia, Mexico and Peru.
According to Andres Velasco, general director of
macroeconomic policy at Colombia's finance ministry, the
different countries in the region face different
Colombia needs to invest in
infrastructure, education and the peace process, while Peru
needs to address issues with the financial system, reduce its
reliance on the mining sector and possibly devalue its
currency. Mexico, meanwhile, has to deal with uncertainty from
the US, Velasco said.
For Bernardo Vargas, CEO of the Colombian power company ISA,
the electricity sector could benefit from increased integration
"Chile has generation [plants] in the north but no way to
get it to southern Peru or even southern Chile," he said. The
big question remains how to incorporate Brazil, he added.
Steven Costabile, the global
head of the private funds group at PineBridge Investments, said
investors have looked at Brazil as a "proxy" over the past few
years, regardless of what has happened in the rest of Latin
PineBridge did not consider investments in Brazil for a
time, but now the country has come back into play as it rises
out of recession, Costabile said.
"We were out of Brazil, but now it is back on the radar
screen," he said. After Brazil, comes Mexico, he added.
Over the long term, investors could increase their
allocations to Latin America as they continue the search for
yield and move into alternative investments, such as private
market credit and infrastructure, Costabile said.
"Latin America is not getting its fair share, but it is
coming. This is going to be a long-term trend," he said.