Brazil's Bovespa has clearly supplanted offshore alternatives as the primary source of equity capital in Latin America. Around 80% of the $28 billion raised through 84 offerings between January and mid-August took place on the Bovespa, according to Dealogic. Argentina's Banco Patagonia became the first non-Brazilian entity to choose the exchange for a primary listing. And there is a pipeline of issues from countries with capital controls such as Argentina and Colombia mulling primary listings on the Bovespa in coming months, says Sebastien Chatel, head of LatAm ECM at Credit Suisse.
However, as the global credit crisis deepens, the exchange remains highly exposed to the whims of foreign investors. According to the Bovespa, foreign investors bought 73.4% of the 28.9 billion reais in equity capital raised in the first seven months of 2007. The exchange was pummeled by global equity meltdown in August and it remained to be seen how much further Latin markets would fall. But Chatel saw the drop as a healthy correction in the Brazilian market and says a combination of greater risk aversion and a heavy pipeline will make investors more selective going forward.