The Lima Stock Exchange (Bolsa de Valores de Lima) has announced that public and private sectors are coordinating measures to prevent the reclassification of the Peruvian market from an “Emerging” to a “Frontier” class.
Maintaining its emerging market category will allow Peru to receive and manage investment flows similar to other thriving emerging countries, such as
Brazil, Chile, China,
Colombia, India and Mexico. The reclassification is a significantly negative threat to Peru’s capital market and economy.
In addition to the increased perception of risk, the vote will affect the currency exchange rate and local interest rates within Peru, adversely impacting all Peruvians by reducing the value of their assets.
To reaffirm Peru as a thriving emerging market, Peru requires a joint effort between the private and public markets. In this sense, the country has made progress in recent years by improving stock market retail culture through improving education and dissemination, developing exchange-traded funds and derivatives, reducing trading fees, promoting regional integration and developing direct market access.
The Peruvian Congress also approved the Law to Support the Liquidity and Integration of the Stock Exchange, aiming to improve the dynamism of the equity capital markets in Peru. The legislation eliminates taxes on shares traded at the Lima Stock Exchange that are at minimum liquidity levels and do not involve the change in control through a significant block trade.
