A mission led by Finance minister Alonso Segura is to ask Morgan Stanley’s international capital markets division — Morgan Stanley Capital International — to reinstate Lima’s stock market, the BVL, as an Emerging Market, EM.
Morgan Stanley earlier this month told its clients, and Bloomberg, that it would be downgrading Lima to Frontier at the end of September (PT August 21, 2015).
Official announcements from the BVL said that the mission, including representatives of the Lima exchange and the Central Bank, the BCRP, has a meeting with MSCI in New York on Sept 14.
The announcements said the low prices and low levels of movement on the Lima exchange are due not to the performance of the companies quoted on the exchange but to exogenous factors led by the fall in price of minerals and metals.
As of several years some of Peru’s top companies have been traded as ADRs on the New York Stock Exchange. These include the Banco de Credito (BAP), Minas Buenaventura (BVN), Cementos Pacasmayo (CPAC), and Graña y Montero (GRAM). (Hochschild (HOC), the silver miner, is quoted on the London exchange.
Thousands of ADRs representing the shares of companies from all over the world are traded in New York, London and Frankfurt. The Peru ADRs would not be directly affected by a markdown of the BVL to Frontier.
But the lower grade would mean that many foreign investment funds would avoid trading on the BVL, which carries with it the additional risk of exposure to the risk of foreign exchange manipulation (see Immediate Outlook Slow). BVL quotations are in Soles. Its main index has fallen this year by close on 30% in soles, a few points more in dollars, in line with emerging markets worldwide.