Colombia stock market seeks to boost trading by listing new funds – Reuters

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BOGOTA (Reuters) – Colombia hopes to attract billions of dollars to its stock market by listing new assets like real estate investment funds to propel trading now limited to a few dozen companies, the head of the bourse said.

Colombian Securities Exchange President Juan Pablo Cordoba, interviewed for the Reuters Latin American Investment Summit, said there should be at least double the 69 companies trading on the exchange and called for modifying tax regulations to make the bourse more competitive.

The local stock market trades an average of $50 million a day in shares, a figure that pales against the $1.2 billion daily volume in domestic public fixed income instruments and $1 billion in the foreign exchange market

Cordoba said the new real estate investment funds would be aimed at raising money in the market for the construction or acquisition of shopping centers, office buildings and other structures.

“We’re working toward being able to list those assets in the market, so there will be a new class of equity assets, not company shares but a fund that’s registered in the equity market and traded as a stock,” said Cordoba at the exchange in Bogota.

“In terms of market issuance we could be talking about up to 5 trillion pesos, about $2 billion, in the next two or three years,” he said in the interview last week.

The funds, which already operate in the United States and Mexico, could be available throughout the Pacific Alliance nations of Mexico, Colombia, Chile and Peru, Cordoba said.

The stock exchanges of the four countries also have integrated securities’ trading through the Latin American Integrated Market (MILA).

Colombian Securities Exchange President Juan Pablo Cordoba speaks during an interview with Reuters in Bogota, Colombia August 3, 2017. Picture taken August 3, 2017.Jaime Saldarriaga

Such investment vehicles could help attract foreign capital as an alternative to the more traditional stock market, which has struggled to attract interest from companies, even with a 10 percent increase in share prices so far this year.

More Stock Market Trading Eyed

Cordoba, 52, said that of the 69 companies listed, investor interest is focused on about 20 firms.

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Progress needs to be made on regulatory issues to make the market more competitive on taxation to increase investor interest, he said.

The government also needs to urgently clarify rules governing the mining and oil sectors, which have been hit by popular consultations by local communities on projected investments, discouraging a range of new exploration and production projects.

“The world has a lot of liquidity and nowhere to invest it, so if Colombia does it well or better than its neighbors, we will have a good opportunity,” said Cordoba, who holds a doctorate in economics from the Wharton School of the University of Pennsylvania.

The exchange chief said that a recent peace accord with Marxist Revolutionary Armed Forces of Colombia (FARC) rebels will also open investment opportunities in sectors like agriculture, which could lead to the creation of additional investment funds for local capital markets.

Before the peace agreement was signed late last year, the FARC held sway over large expanses of farmland.

(Follow Reuters Summits on Twitter @Reuters_Summits)

Additional reporting by Luis Jaime Acosta; Editing by W Simon