The impact of the coronavirus crisis on the financial sector in Central America is expected to be felt mainly in services related to stock brokerage and investment advice, where a drop is expected.
The "Information System for the Impact Analysis of Covid-19 on Business", prepared by the Trade Intelligence Unit of CentralAmericaData, measures the degree of impact that the crisis will have on companies according to their sector or economic activity, during the coming months.
In 2018, the volume traded in the Panamanian Stock Exchange totaled $6.100 million, 15% more than the data reported in 2017, mainly because of the behavior of the primary market.
The increase in the volume traded in 2018 represents a recovery in the stock market, since in 2017 the stock market activity of the Panama Stock Exchange (BVP) reported a 28% decrease compared to 2016.
The Panamanian Stock Exchange announced the implementation of its new electronic trading system, which operates with Nasdaq Matching Engine technology.
Directors of the institution informed that one of the main objectives of the transformation to its trading system is to position the Panama Stock Exchange (BVP) as the regional hub of the capital market.
In Panama, the liquidation has been ordered of Blue Numbers Securities Inc., because it shows "lack of supervision and management, and a board of directors that is not very involved."
The Superintendency of Securities ordered the forced liquidation of the securities company Blue Numbers Securities Inc. and appointed Rafael Moscarella Valladares as liquidator.
In Panama, the portfolio managed by brokerage firms totaled $35,577 million at the end of the first half of the year, 11% more than was registered in the same period in 2017.
According to the Superintendency of the Securities Market, of the total portfolio, 43% correspond to bonds, another 27% of the assets belong to common shares, and 21% is made up of other securities.
Using a web platform with key information from all of the markets in the region and the Dominican Republic, Central American stock exchanges propose reviving the plan to create a truly integrated regional market.
Once again authorities at stock exchanges in Central American countries and the Dominican Republic have put back on the table the plan to integrate the stock markets in each each country into a single regional one.
The Ministry of Finance is considering issuing up to $500 million in debt securities in the Chinese securities market, in order to take advantage of the lower borrowing costs offered by the Asian market.
The advantage is that, according to Minister Dulcidio De la Guardia, " ... after changing the money to dollars, it is possible that the country could reduce by a quarter or half a percentage point the rate it would need to pay for a bond in dollars with equivalent maturity."
The volume traded on the stock market in 2017 amounted to $5.323 billion, 28% less than the amount traded during the previous year.
Despite the decrease registered, authorities and participants of the stock market see the performance in 2017 as positive, and attribute the decline to the fact that in 2016 there were extraordinary movements, caused by the participation of the government and some private sector companies.
Four months after the operations of the two markets were integrated, five brokerage firms are already carrying out transactions and four other are waiting for their operating permit to be processed.
The attractiveness of the Panamanian stock market for both investors and companies raising money explains the great interest that the brokerage firms in El Salvador have shown in being part of the platform that allows them to operate remotely in the Panamanian market.
Panamanian stock market officials are evaluating increased controls on securities houses operating in the country, through the figure of corporate governance.
The Superintendency of Securities in Panama is analyzing the possibility of demanding that the stock brokers fulfill norms of corporate governance, as banks and insurers already do.
The first stock market transaction between the two markets has been completed, under the remote operator scheme.
From a statement issued by the Stock Exchange of Panama:
The beginning of cross-border transactions between the El Salvador and Panama Stock Exchanges took place on Friday, May 19, 2017, when the first stock exchange transaction took place between the two markets under the Remote Operator scheme, which allows Stock Brokers from both countries to take part in the different operations in the two markets without the need for an intermediary.
The Superintendency of the Securities Market will start asking for a risk rating in all applications for registration of securities.
From a statement issued by the Superintendence of the Securities Market:
May 10, 2017. - The Superintendence of the Securities Market (SMV) will require a risk rating as part of the documents that must be included in any application for registration of securities, in accordance with the provisions of Agreement 3-2017 of April 5, 2017, "Amending Agreement 2-2010 of April 16, 2010 on the Procedure for the Submission of Applications for Securities Registration and for Termination of Registration to the SMV and other provisions" published in the Official Newspaper La Gaceta No. 28259-A of April 17, 2017.
Of the total volume traded on the stock market in the first quarter, 55% were in the primary market, 29% in the secondary and the remainder were repurchases.
"..."The most traded instruments in the primary market were corporate bonds-notes and negotiable commercial securities for $338.9 million, followed by Bonds and Treasury Bills for $228.8 million," said the Stock Exchange in a note to which ANPanama had access.In addition, $20.1 million in shares of mutual funds were traded in this market, along with $9.9 million in common stock and $198 thousand in preferred shares."
The government has issued on the local market $125 million in Treasury Bonds maturing in 2024, with an average yield of 3.63%.
From a statement issued by the Ministry of Economy and Finance:
On March 14, the Republic of Panama issued Treasury Bonds maturing in 2024 with a 4.95% coupon, in line with the debt strategy adopted by the Government.
The government and the private sector are working on a plan to renew the business model for the financial center, developing specialized services for different market niches.
A working group consisting of representatives from government, regulators and the private sector are making an assessment of the financial services platform operating in the country in order to redefine their objectives using the example of best practices in similar jurisdictions which are more developed and adapted to international regulation.