So it’s Brazil versus the rest in terms of Latin American stock markets.
The decision by the Mexican stock exchange - the Bolsa Mexicana de Valores (BMV) - to join with the bourses of Chile, Peru and Colombia in the pan-regional Mila experiment means that the major Latin American markets are joining forces to try and generate a depth of liquidity to rival the huge BM&FBovespa.
BMV is the second largest exchange and brings the total combined capitalisation of the Mila exchanges to about $1 trillion, close to the BM&FBovespa’s $1.2 trillion. Aside from Argentina, the stock exchanges in the major Latin American economies are now to co-operate in an attempt to provide a serious alternative to Brazil. And with 2011 being the first year since 2004 that Latin American equity issuance ex-Brazil has totalled more than that has been issued in Brazil the potential is clear.
But potential is easy to imagine, harder to realise. According to the Santiago exchange only 8 transactions in Chile were conducted via Mila in November and data from Bloomberg showed that in the first four months of operation Mila trade totalled just 183 transactions worth $2.9 million, or the equivalent to about 20 seconds of trades on the Bovespa.
Still, it does show a Mexican desire to orientate itself to the region.
One senior Latin America banker recently told Euromoney says he is still unsure how to view Mexico – is it, he asks himself, a satellite economy of the US or is it part of the Latin American growth story?
Perhaps this announcement shows that Mexico believes the latter might now be the better bet.
