NEW YORK (Reuters) - By a number of key measures, the market for U.S.-listed Latin American stocks has finally matured, and relative pricing parity between local exchanges and New York is drawing more long-term investors looking to capitalize on the region's growth prospects.
Gone are days when trading in the region's American Depositary Receipts was dominated by arbitrageurs looking for quick profits from price inefficiencies caused by thin volume, haywire currencies and sometimes exorbitant tax costs.
"There's been a big change in the market for Latin ADRs in the past couple of years and today, for a dedicated investor like me, it makes almost no difference holding ADRs or shares in Brazil in Mexico," Gonzalo Pangaro, a manager for the T.Rowe Price's Latam Fund, told the Reuters Latin American Investment Summit.
"The days of price arbitrage are gone - shares in New York trade in tandem with their local counterparts," Pangaro said.
Strong returns and efforts by some of the region's largest companies to increase stock ownership among foreigners, have resulted in booming trade in Latin American ADRs in 2004 and 2005.
Trading volume in the 99-listed issues from Latin America soared 75 percent in 2005 from the previous year to a record $216 billion, according to data by The Bank of New York.
At the same time, Latin America finished as the best performing depositary receipts region, with companies including Brazil's Banco Bradesco SA (BBD.N: Quote, Profile, Research, Stock Buzz) and Argentina's Tenaris SA (TS.N: Quote, Profile, Research, Stock Buzz), posting returns higher than 100 percent.
"Our ADR program is a success," said Jose Sergio Gabrielli, chief executive at Brazil's oil monopoly Petrobras SA (PBR.N: Quote, Profile, Research, Stock Buzz). "We put a lot of effort in getting the shares in New York to become more actively traded and wide known. And the efforts paid off."
Petrobras alongside Brazil's CVRD (RIO.N: Quote, Profile, Research, Stock Buzz) and Mexico's America Movil (AMX.N: Quote, Profile, Research, Stock Buzz), topped the list of the regions' most actively traded stocks in 2005, with volumes in excess of $20 billion each for the year. Continued...
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