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Almost non-existent a decade ago, Peru’s capital markets have flourished over the past five years, with the government and big companies such as US copper miner Phelps Dodge finding ample demand for bonds. Now the new government of president Alan García, which took office on July 28, aims to develop the markets further. There are plans to allow smaller companies to raise cash, develop a secondary mortgage market to unleash new funds to redevelop slums, and encourage pension funds to invest in productive industries, not just in sovereign bonds. “Deepening the local market in soles is going to be one of the pillars of our economic policy,” says García’s chief economic aide, Enrique Cornejo. “Our resources aren’t being put to work via the markets.” The barriers to smaller Peruvian businesses are daunting. Because many companies cannot meet the listing requirements of the Bolsa de Valores de Lima, Peru has launched only four initial public offerings with a total value of $40 million in the past 15 years, despite strong economic growth. The business sector is severely undercapitalized, with a total of $7.5 billion in debts, or around 10% of Peru’s GDP. A change in that situation is crucial to Peru’s long-term development, as small and medium-size companies generate 40% of GDP and three-quarters of all jobs in the country. However, these companies’ financing costs are up to 2.5 times those of big corporations.

“Bond of the South”

Argentine banks’ holdings of public debt are to be restricted to a maximum of 35% of their assets, the central bank has announced. The measure aims to reverse the crowding-out effect by inducing banks to focus on private investment. “This provides additional degrees of freedom to conduct monetary policy, increasing the systemic independence from treasury needs and minimizing the ‘fiscal dominance’ that historically characterized our economy,” says Martin Redrado, Argentina’s central bank governor.

Results from the fourth semi-annual surveys of foreign exchange volume, published simultaneously by the US Foreign Exchange Committee (FXC) and UK Foreign Exchange Joint Standing Committee (JSC), show that the market is continuing to expand strongly.

Reuters and the Chicago Mercantile Exchange have announced the financial institutions that have confirmed their intention of participating in their joint venture, FXMarketSpace’s Early Adopter Program.

Electronic options market to open cash equity business in the third quarter.

The latest GDP figures from China make startling reading. First-half 2006 GDP grew 10.9%, with second-quarter growth accelerating to 11.2%, the fastest pace since 2003 when China’s economy last overheated. The news has reignited concerns that China’s economy is out of control.

73 the percentage of retail investors who expect the FTSE 100 to end the year higher than its present level, according to a survey conducted by share-trading website ADVFN.

What’s to be expected from a for-profit monopoly?

Keeps lucrative business and becomes an exchange with formal SEC approval.

The Squadra Azzura won the World Cup last month after a shaky start and by steadily improving their performance. It’s a stark contrast to the development of the Italian hedge fund industry. Italy rode the wave of hedge fund expansion by introducing regulation as early as 1999. As a result, growth has been strong. Italian funds now manage €18.3 billion, more than 5% of total hedge fund assets invested in Europe.

By Zach Fuchs