Costa Rica: Stock Market Up 18%

The fall in interest rates has caused an increase in bond prices, encouraging holders to make profits.

Monday, April 8, 2013

During the first quarter of 2013, the stock market in Costa Rica grew by 18%, with the secondary debt market being the best performing, going from $1.34 billion in the first three months of 2012 to $3.459 billion in the same period of 2013.

Data from the National Stock Exchange (BNV), reveals that for the entire secondary market (including bonds and other instruments) there was also a rise of 39% (data dollarized).

"The rest of the issuers, excluding the Central Bank and the Ministry of Finance, also saw their roles as being more dynamic in 2013, namely, of the 18% in trading volume, the most important players were the public banks," reported Elfinancierocr.com.

The bonds issued by the Banco de Costa Rica and Banco Popular were preferred, unlike the Banco Nacional and Bancrédito which were less attractive in the market.

According to José Rafael Brenes, BNV's general manager, market conditions also encouraged those who had not yet made any investments and the falling trend put pressure on making purchasing decisions quickly.

For his part, José Mario Murillo, director of the post transactional brokerage firm Grupo Sama, said the trend allowed for more business opportunities.

Jorge Baltodano, director of the brokerage firm Aldesa also noted that an increases in bond prices was the catalyst for the activity.



More on this topic

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The new tax reform proposal being discussed in Costa Rica raises capital gains tax from 8% to 15%, and also excludes recognising as a debt deposits made by issuers in the securities market.

In the view of the National Stock Exchange (BNV), not recognizing deposits made in the stock market as debt leaves it at a clear disadvantage, compared to banks, as a source of financing for companies. Not only does it compromise access to investors' savings, it also significantly limits companies and individuals investment options.

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The proposal to create a market for direct trading of securities has been rejected by the authorities, yielding to pressure from industry participants themselves.

Although the World Bank itself proposed analyzing the creation of a market where investors could directly buy and sell securities, the government bowed to pressure from the National Stock Exchange and stock brokers, and chose not to include the proposal in the initiative for modernization of the Law Regulating the Securities Market.

Little Interest Costa Rica's Long Term Bonds

July 2013

The Finance Ministry has proposed extending the maturity of domestic debt bonds, which would not be in the interest of investors.

"During 2013, the auctions were dominated by long-term securities, specifically, those whose maturity dates were equal to or exceeded ten years," noted an article in Elfinancierocr.com.

Costa Rica: Banking and Government Compete for Money

January 2012

The increased demand for bank credit from consumers and businesses plus the financing needs of the government, is putting pressure on the capital market and interest rates.


The competition for liquidity can be seen in the activity of the National Stock Exchange, where the amounts being released on the exchange are increasing because of the concurrence of the state banks - Banco de Costa Rica, Nacional and Popular, and of private banks like Scotiabank, and by other entities such as Grupo Mutual y la Compañía de Fuerza y Luz.