Investment Opportunities, Due South

At the end of May, a new economic alliance in South America is poised to find its legs.  The plan to integrate the stock markets of Colombia, Chile and Peru has flown relatively under the radar, with only the most devout readers of economic periodicals or South American news getting an inkling of what lies ahead for the proposed Integrated Latin American Market (MILA, in Spanish).  MILA aims to enhance access to capital for businesses within these countries as well as to expand the available investment tools for local and international markets. So why should Floridians take notice of MILA? 

Image: Florida Trade and Logistics Study, 2010

1. Florida’s investors have an opportunity to harness the yields of a higher growth rate of emerging economies in South America.  Over the next three years, the combined  Gross Domestic Products of Colombia, Chile and Peru are estimated to increase by 5.32%, as opposed to the estimated three-year Gross Domestic Product growth of 2.79% in the United States.  In addition, the combined population of Colombia, Chile and Peru is growing at a faster pace, which means access to more consumers ( 6.4% population growth, versus 4.8% population growth in the United States, by 2016).

2.  MILA will further diversify investment options.  To date, Brazil has been the seat for international investment in South America.  The integrated markets of MILA will provide the economies of scale needed for global investors, such as China and the United States, to take notice by adding approximately 560 businesses in which to invest.  A successful integration would secure MILA as South America’s second largest stock exchange with a reported $720 billion in market capitalization (i.e., the total value of company shares represented on the integrated exchange).

3.  South America currently plays an important role in the Florida economy, and there is room to grow.   In 2010, Colombia, Chile, Peru were in the top ten countries that purchase Florida products representing $5.5 billion dollars in Florida exports, and Colombia is Florida’s fifth largest partner for imported goods.  Not only is the trade relationship significant, but South America also represents the largest proportion of international vistor spending in Florida at approximately $2.4 billion in 2010.

As the global economy moves toward increased coordination, the flow of goods, people and capital persistently break down socio-geographic boundaries to find the best opportunities for business and investment.   The opportunity presented by the formation of MILA, then, translates into the a new avenue for Florida investors as well as closer economic ties with our neighbors to the South.

Sources: Reuters, The Economist, International Monetary Fund, U.S. Census Bureau

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