Bloomberg News

Peru Stock Exchange Operator Plunges After Colombia Merger Delay

June 14, 2011

June 14 (Bloomberg) -- Shares in the operator of the Lima stock exchange plunged 11 percent after the company announced a delay of its merger with its Colombian counterpart to give Peru’s new government time to consider details of the accord.

Bolsa de Valores de Lima SA fell 11 percent to 10.18 sols at 1:15 p.m. New York time while Bolsa de Valores de Colombia SA, which operates the Bogota exchange, fell 2 percent to 42.20 pesos, a three-week low.

The BVL and BVC, as the exchanges are known, said in a joint statement yesterday the postponement allows them to provide information on the project to President-elect Ollanta Humala’s administration “before it is finalized.” The merger plan won’t be altered, the statement said.

Investors pulled out of Peru’s financial markets the day after Humala’s election on June 6. The benchmark stock index plunged a record 12 percent on June 6 on concern Humala, a one- time ally of Venezuelan President Hugo Chavez, would fulfill pledges he made early in the presidential campaign to boost government control of the economy.

The delay doesn’t affect integrated stock trading between Colombia, Peru and Chile, known as MILA, which began on May 30.

Kurt Burneo, economic adviser to Humala, said in an interview June 8 that the MILA integration was done “too quickly” and the new government may renegotiate parts of the arrangement if benefits aren’t fairly shared. There is “asymmetry in the distribution of benefits” between the countries, he said.

Undisclosed Amount

Bogota-based BVC said in January it was acquiring 64 percent of the BVL for an undisclosed amount and the transaction would be completed later this year. The combination would create the fourth-biggest market in Latin America after Brazil, Mexico and Chile. The merged exchange aims to boost liquidity, enable portfolio diversification and create new securities.

“The BVL and BVC reiterate their interest in continuing the process of merging the two entities and confirm their confidence that the integration of the exchanges will contribute in a significant way to the development of capital markets in Peru and Colombia and in this way to the economic growth of both countries,” the statement said.

Colombia’s IGBC Index fell 0.2 percent to 14,219.17 at 1:42 p.m. New York time. The Lima General Index rose for the first time in three days, climbing 0.3 percent to 20,663.56.

--With assistance from John Quigley in Lima. Editors: Richard Jarvie, Harry Maurer

To contact the reporter on this story: Helen Murphy in Bogota at hmurphy1@bloomberg.net

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net


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