Within the framework of the Investor conference held in Santiago de Chile, Peru21 spoke with Andrés Venegas, Head of Capital Markets at Credicorp Capitalon the challenges and opportunities facing the capital market in the Andean region.
Venegas addresses key topics such as stock liquidity, the integration of stock exchanges, the impact of AFP withdrawals in Peru, and the role of the political situation in investment decisions.
What is the level of liquidity that currently exists in the capital markets in the region? How important is it for the GDP of those countries?
The level of liquidity in the Andean markets (Colombia, Peru and Chile) has been improving since 2023. Today Chile has an average daily transaction of US$183 million, Colombia of around US$30 million and Peru of US$14 million. We have seen a good recovery from the levels seen in 2023 and we are optimistic that it can continue to deepen, especially with the consolidation of Nuam Exchange that has resulted from the merger of the three stock exchanges: the Santiago Stock Exchange, the Lima Stock Exchange and the Colombia Stock Exchange. This will allow us to be a more visible market for international investors, to have more issuers, to have greater depth and greater liquidity. It is a process that is being executed. We are optimistic that it will materialize next year. In that order of ideas, I believe that the market will continue to grow and deepen.
How is the Andean market of these three countries positioned globally, especially in this complex scenario with tariffs, with crisis? Is it attractive to foreign investors outside the region?
At the end of the day, the commitment to having a consolidated market implies having a larger and deeper market that is of greater interest within the eligible universe of investments. Although Chile is the largest market of the three, it is still small when viewed individually. The goal of having a joint market is precisely to generate greater visibility on the part of foreign investors, mainly because they will have greater alternatives for risk diversification, diversification across industries, and this will generate greater attraction for this type of capital.
However, it is not simply about having the merger of the stock exchanges in terms of technological and operational systems, regulatory issues must be observed such as what you mention about tax issues, good governance issues on the part of the listed issuers, issues of protection of minority shareholders, accounting issues, issues of the company’s good governance code and so on.
So, to the extent that there is a will, not only of the Nuam Exchange project as such, but also of the governments to generate homogeneous standards, that is when we will be able to truly achieve an integrated market that will result in the benefit and visibility that the market will offer at an international level with its comparables.
How important or what could be the impact that this electoral season will generate in the three countries?
After many years, 2026 is a year where presidential changes converge in Colombia, Peru and Chile. Without a doubt, these political issues will always generate volatility in the markets and a certain level of uncertainty as the dates approach to see the profile of the governments that can be elected. However, we also believe that opportunities can arise in this volatility, given that the entry levels or the prices at which share prices can be achieved can generate an attractive entry level to generate returns.
Beyond the uncertainty generated by the political issue, it must be taken into account that one must be aware of the risk profile one has when creating a portfolio, especially in stocks, taking into account that volatility will affect returns and also the permanence profile to which I want to have exposure. So it is very important to be well advised, to be well profiled in terms of risk appetite to constitute a portfolio, and even more so in times of elections, but always keeping in mind that there is a time horizon in which investment strategies must be planned.
In Peru, an eighth withdrawal of AFPs has been approved and public spending is also increasing considerably. What image do they generate or how does it affect the confidence that investors in Peru have in the capital market?
In terms of the capital market it can have various effects. For example, to the extent that institutional funds have fewer resources to invest and manage smaller portfolios, it will directly affect the dynamics of the capital markets. And of course, the investments made by pension funds, for example, in stocks that are companies that mobilize the economic dynamics of the country, generate an effect and a deterioration in the economic dynamics. When foreign investors see that the dynamics provided by the AFPs are affected or reduced, they also do not generate as much attractiveness to be susceptible to being chosen when investing, and even more so with some comparable companies in the region. Peru is the market with the least dynamism of the daily average traded in the stock market and if these withdrawals continue to materialize, we can continue to see direct effects on that average daily volume.
What reforms can be made to generate more dynamism in this sector?
In light of the Nuam Exchange project, it is not only about having the will to integrate the stock exchanges at an operational and technological level, (…) there are other issues that depend on the political will of the governments to be able to align, such as tax issues, issues of protection of minority shareholders, codes of good governance of the companies that are going to be listed, minimum requirements to be listed and many things that are definitions that require a lot of political will for governments to can reach agreements to create a common market. However, they are not necessarily issues that are within the priority of political agendas, much less in pre-electoral times, but they will undoubtedly be a determining factor that we will have to take into account so that we can advance in a total and real integration of the Andean market.
What is Credicorp Capital’s strategy to face these years, especially this electoral period and uncertainty in the region?
Well, Creditcorp Capital has more than 12 years advising investments. We have developed great experience mainly in these markets over time and we have a network of specialists who accompany all these situations and this is one more of them. As I told you, it is not necessarily a situation that is bad because we can also see changes from governments to more pro-market governments or also changes that generate incentives in investments in capital market products.
Which of the three countries is the one in which a calmer outlook is foreseen, generating a little more certainty?
In political terms it is difficult to make a prediction, but one thing is clear. When you have governments that have clear rules of the game, that promote capital market assets, that make definitions in terms of how the capital market contributes to the economic growth of countries, that is when greater interest is generated so that different investors are willing to make investments in shares, which at the same time are the ones that make investments in the productive system of the economies. It is difficult to predict, but let’s say that under a free market philosophy and support for capital markets, governments that follow this line will undoubtedly generate greater dynamism in their markets.
What is the projection on the new governments that may take office next year?
Being able to be sure of what line the governments will follow in our countries is difficult, but we do believe that the line we have today will tend to moderate. I think that many of the citizens of our countries have seen that there is an opportunity to have some change and we are optimistic that it will be for the better.
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