Merged South American bourses off to slow start


By Felipe Iturrieta and Anthony Boadle

SANTIAGO/BOGOTA (Reuters) - The stock markets of Chile, Peru and Colombia merged on Monday to become Latin America's second-largest exchange, but trading was limited and faces tax hurdles coupled with political uncertainty in Peru.

The Integrated Latin American Market (MILA) allows cross-border electronic trading of shares of 565 companies listed in the three bourses, which have a combined market capitalization of $691 billion.

That's greater than the Mexican stock market's $453.5 billion and second only to Brazil's bourse with $1.5 trillion.

Brokers said that the first "symbolic" trades were by Colombian brokers who bought shares in Chilean airline LAN, electricity generator Endesa Chile and Peruvian zinc producer Volcan.

Officials said that MILA would boost liquidity and initial public offerings, providing a source of cheaper capital to companies in the fast-growing countries.

"Investors will be able to diversity portfolios with access to a much larger market that will be absolutely transparent and straightforward," said the head of the Bogota stock market, Juan Pablo Cordoba.

Traders said that a major hurdle is the lack of a common tax regime between the three countries, besides having different credit ratings and securitization rules.

"For now, I prefer to invest in an indexed fund rather than buy directly in the Peruvian or Colombian stock markets," said Cristian Castillo of ImTrust brokerage in Santiago.

Few brokerages have registered to trade on MILA. Only four of Santiago's 40 brokerages had filed the paperwork by Monday.

"We have to give it some time, but I think this is a very positive development," said Andres Ortiz, vice president of Colombian brokerage Global Securities.

The cross-border exchange opened under a cloud of political uncertainty in Peru, where the stock market plunged on Monday at the prospect of left-wing populist Ollanta Humala winning Sunday's presidential run-off.

Investors fear that Humala could intervene in the economy and hurt private business interests if he defeats right-winger Keiko Fujimori.

"For sure, the main issue in Peru is the elections risk," said Daniel Lozano, analyst at Serfinco brokerage in Bogota.

"But you could also see this as an opportunity because this will be factored into prices."

MILA said it would soon create an index of its 40 most traded shares, the S&P/MILA 40 Index.

(Additional reporting by Antonio de la Jara in Santiago, Ursula Scollo in Lima and Nelson Bocanegra in Bogota)