Latin American Capital Markets

GLOBALIZATION.TECHNOLOGX AND REGULATION IN CAPITAL MARKETS 45Table 2-2 I Change in Listings and Market CapitalizationI in Selected Countries, 1990-2000Percentage change in Market capitalizationCountry listings, 1990-2000 (percentage of GDP)ArgentinaBrazilChileMexicoPeruUnited StatesSource: IFC(2001).-30.17-19.34+20.83-14.49-3.40+28.3619.720.7101. 134.521.2180.8The number of listings has dropped by 30.17 percent in Argentina, 19.34 percentin Brazil, 14.49 percent in Mexico, and 3.40 percent in Peru (table 2-2). Chile isone of the few examples in Latin America with an increase in listings. The size andscope of the stock market continue to be small relative to the overall economy. Marketcapitalization as a percentage of gross domestic product (GDP) ranges from anaverage of 15.6 percent in Eastern Europe, to 25.5 percent in Latin America, and 38.5percent in Asia.The stock market in Chile is quite large in size relative to the economyand is an exception in Latin America. In the United States, the market capitalizationrate is 180.8 percent of GDR and the picture is similar for annual trading volumeas a percentage of GDR It was I I. I percent in Latin America, I 1.4 percent in EasternEurope, and 63.5 percent in Asia, but a high of 154.9 percent in the United States.Cross-ownership of markets, mergers and acquisitions, alliances and partnershipsbetween exchanges, cooperation between regulators, and demutualization ofexchanges are all considered part of the globalization strategy. Harmonization of accountingstandards, listing requirements, qualification of financial intermediaries, andregulation are at various stages of development. These changes are expected to increaseefficiency and reduce costs for the global investor. Some of these strategies becomeeven more important for emerging capital markets that must identify strategiesto compete in the global marketplace and ultimately contribute to the economic developmentof the country and the region.Some traditionally structured exchanges have begun to question the appropriatenessof their membership ownership and governance structure. Business ismoving at a fast pace, and stock exchanges do not have the luxury of obtaining theapproval of their membership for every change. Stock exchanges need to be flexibleand quick in making decisions and well financed to compete globally and invest in bothCopyright © by the Inter-American Development Bank. All rights reserved.For more information visit our website: www.iadb.org/pub