Latin America: New York squares up to battle with local bourses
The growth in volumes may be higher across the region, but a NYSE listing still has big advantages for the right companies at the right stage of their development. Felix Salmon reports.
IS SÃO PAULO supplanting New York as the Latin American equity market of choice? Of the top 20 Latin American IPOs of 2006, only one – Argentine steel maker Ternium's – came with a listing in New York. Fifteen of the top 20 IPOs were Brazilian, and not one of them saw fit to pursue a dual listing. Meanwhile, average daily volume on Bovespa, Brazil’s stock exchange, soared 68% to $1.12 billion in 2006 from $667 million in 2005. Foreign participation on Bovespa continued to rise, even as various US grandees belly-ached in public about signs that New York was losing its status as a global financial centre.
The story, though, is far from clear. It turns out that the activity in New York was, in many ways, even stronger than that in São Paulo. The 96 US-listed American depositary receipts had a total trading volume of 12 billion shares with a total value of $402 billion: an increase of 65% in absolute volume terms, and an 86% rise in dollar terms. In other words, New York outperformed Brazil.
New York still has more Latin share volume than any market in Latin America, and the largest foreign investors in the Brazilian stock market – the likes of Wellington and Fidelity – are the biggest players in the ADR market as well.