Latin American capital markets seek integration and reform

Latin American stock markets face a critical need for regional integration to compete for global capital. Christian Khatchikian, Secretary General of the Ibero-American Federation of Stock Exchanges (FIAB), noted that the market capitalization to GDP ratio in Latin America is approximately 35%, significantly lower than the 65% to 70% seen in OECD countries. Integration could help expand the investor base and create the necessary scale to compete against aggressive private capital markets, such as those in the United States.

In Chile, the government has introduced a capital market reform (MK4) featuring approximately 30 measures designed to reduce friction and increase liquidity. The reform aims to address the reduced depth of the Chilean market following pension withdrawals. Key components include the creation of the National Housing Fund (Fonavi), managed by BancoEstado, to purchase mortgage credits and lower financing costs. Additionally, a voluntary housing savings scheme will offer a 3% state bonus for those saving at least 7% of their first home's value, targeting properties up to 6,000 UF.