Central America bets on integration to boost stock markets

Central America bets on integration to boost stock markets

Capital Markets Equity IPO Costa Rica Dominican Republic El Salvador Guatemala Honduras Nicaragua

Integration and innovation are the key to the success of stock exchanges in Central America, experts from the region said during LatinFinance's 4th Central America Finance & Investment Forum in Panama City on Thursday.

Central American countries need to "join forces" to be attractive on global markets, said Olga Cantillo, vice president of the Panama Stock Exchange.

"In order to be competitive and innovative, we are looking at green financing products, social financing, and integration of capital markets, which will allow us to offer investors greater diversity," Cantillo said.

Cantillo said the alliance between El Salvador’s and Panama’s stock exchanges, a precursor of integration in the area, has produced positive results and improved liquidity. She added that in one year working in partnership with El Salvador, the exchange registered 290 transactions amounting to US$ 60 million.

Nicaragua, the smallest economy in the region, recently signed an agreement to join the exchange. Gerardo Argüello, general manager of the Nicaraguan Stock Exchange, said his country hopes to offer potential investors a wider range of products. During a panel on financial markets in the region, he mentioned that Nicaragua is mourning the dozens of deaths that occurred in recent protests calling for the resignation of President Daniel Ortega.

Still, he said investors remain confident in the stock market despite a drop in trading volumes in recent weeks.

"We haven’t seen any major problems, which keeps us optimists to continue to implement our future plans," Argüello told LatinFinance. The Nicaraguan Stock Exchange’s trading volume reached US$ 1.5 billion last year, with 14 private issuers.

The Dominican Republic, one of the strongest economies in the region, is implementing regulation related to a stock exchange law passed in 2017 that allowed for electronic trading to improve liquidity and increased oversight mechanisms to ensure transparency.

"We have been monitoring the changes," said Gregory Salcedo Llibre, head of the Dominican Republic’s Stock Exchange. He added that the country is making efforts to maintain a competitive domestic market.

"We are getting the house in order first," said Salcedo Llibre, adding that the Dominican stock market behavior is healthy and has provided good results.

"Innovation is the engine that maintains investment in capital markets," he said, citing as examples investments made by pension funds to finance a chain of hotels. Those investments boost the tourism industry, the backbone of the Caribbean island’s economy, he added.