Andean Region: Peru, Colombia attract growth-hungry investors
Cross-border regional ties growing; Asian investment interest emerging
Peru and Colombia’s resilience in the face of the financial crisis has helped the two Andean countries emerge as among the most attractive investment opportunities in Latin America.
Bankers expect both to remain prominent on investors’ radar screens thanks to strong growth rates and relative political stability.
"Colombia and Peru have emerged as the frontier markets of Latin America, demonstrating significant growth potential and an appropriate risk-return profile. Less mature than Chile and Mexico, these markets together provide very interesting investment banking opportunities," says Ricardo De Bedout, managing director and head of investment banking for the Andean and CAC region at Bank of America Merrill Lynch.
Across the border
One of the most interesting trends, adds De Bedout, is the growing cross-border business between the two countries. "Their pension fund systems operate in a similar manner but have limited investment opportunities in their respective markets. As a result there’s been a huge build-up in pension assets over the years, which is why they all want to seek investment opportunities in each other’s capital markets."
Throw in Chile too and it’s clear that a pan-Andean regional market is developing, albeit one still in its infancy. Local regulators are encouraging greater cross-border investment too.