BM&F Bovespa, the Brazilian securities, commodities and
futures exchange, hopes that listings by Asian corporates will
help raise its profile as an international financial centre,
its chief financial officer Carlos Kawall has said.
Listings by local subsidiaries of Asian companies,
principally commodity exporters, would give investors an
opportunity to take positions on the firms equity
valuation in the South American time-zone, Kawall told
Emerging Markets in Cancun.
The Asia push is a medium term goal, since there are
many legal hurdles to overcome, Kawall said. He would not
be drawn on a timeline.
As a commodity producer, Brazil is chained to Asian business
cycles. Chinas economic rebound and voracious appetite
for minerals and commodities have driven a market rally, since
spring 2009. Energy and mineral-producing firms have a 43%
weighting in the Brazilian index.
But some market participants are sceptical of the Asian
focus. Ricardo Kaufman, head of the equity sales and trading at
Bulltick Capital Partners, said: More and more foreign
companies in Latin America will list on the Brazil stock
exchange due to its liquidity and infrastructure but
Asian firms are highly unlikely to follow suit.
Kaufman told Emerging Markets that US
exchanges unrivalled depth of liquidity, and low
transaction costs combined with products that allow
investors to punt directly on commodity prices, such as
commodity exchange-traded funds and derivatives would
provide stiff competition to a push towards Asia from
Kawalls bullish comments sit awkwardly with the softer
risk appetite for Brazilian shares of late. BM&F Bovespa,
the worlds third largest stock exchange by market
capitalization, soared 83% in 2009, but investors fear the
rally may run out of steam this year.
The exchange, created in 2008 with the integration between
the Brazilian Mercantile & Futures Exchange (BM&F) and
the São Paulo Stock Exchange (Bovespa), closed this week
5% lower from its early-January high amid fears of rising
interest rates, lower commodity prices and weaker global risk
Renova, a renewable energy company in Sao Paulo, pulled an
initial public offering on Thursday while a day earlier OSX
Brasil, an oil-services company, downsized its initial public
offer by 67% and JBS, the worlds biggest beef producer,
postponed a secondary share offering.
But Kawall said investor wariness towards greenfield
investments knocked the proposed equity sales of Renova and OSX
Clearly global risk appetite is skittish, but none of
that is related to fears about Brazil, he argued.
Kawall said that, although global capital flows would not
return to the 2006-2007 bull run, Brazils 6% growth has
and would continue to drive investor allocations
Kawall was speaking prior to the March 23 launch by BM&F
Bovespa, the Federation of Brazilian banks (Febraban) and the
mutual fund industry of a project to market Sao Paulo as an
international financial hub and a gateway to Latin American