Traders Cautiously Upbeat About Mila’s Year Ahead


Pulling back from last year’s pre-launch hype, traders remain cautiously upbeat about the 2012 outlook for MILA, the integrated Mercado Integrado Latino-Americano, which in May 2011 linked the Colombian, Chilean and Peruvian stock exchanges.
One of the most upbeat analysts is Bulltick Capital Market’s head of research, Alberto Bernal-Leon. He estimates that, separately, MILA’s three exchanges should grow 20 percent to 25 percent this year, although he described 2012 as “another year of initiation for MILA.”
That should cheer investors, who last year saw one MILA-based investor index, Standard & Poor’s MILA 40  (launched August 26 with 22 companies from Chile, 12 from Colombia and six from Peru) sink 7.2 percent up to December 30, 2011.
Trading in 2011 did hit a few bumps, though, including global economic uncertainty and the slow recovery from a volatile Peruvian election, as well as capital gains tax integration issues between the MILA partners, which almost resulted in a Peruvian pull-out. But the S&P MILA 40 clawed back 10.08 percent this January, showing a total profit of 2.16 percent over the trading period from August 26, 2011, to January 31, 2012.
Positive drivers for MILA in 2012, Bernal-Leon said, should include upbeat demand for raw materials – which will boost exchanges in Chile and Peru – based on a gross domestic product forecast of 8.5 percent for the No. 1 consumer, China, plus projected GDP growth of 2.5 percent in the United States.
In addition, Bernal-Leon predicted, world monetary policy will remain “extraordinarily easy, and therefore terms of trade will remain quite positive for the region. Copper will stay at about $3.40 to $3.20 (per pound), oil at $95 to $100 (per barrel).”
Hopes also are high that most of the legal, technical and tax intricacies of merging the three exchanges are “nearly complete,” said Jose Fernando Restrepo, the head of research at Medellin-based brokerage Interbolsa. Restrepo is looking to the second and third quarters as a busier time for MILA, with “more gear”.
Other upsides in 2012 include the forecast from official MILA sources that oil companies on the Colombian BVC will “outperform,” with Petrominerales and Pacific Rubiales leading the way, followed by Canacol and Ecopetrol. There also are hopes that Mexico’s exchange – the second-biggest in the region, after Brazil – might soon join MILA, having signed an agreement of intent in December. Any further announcements about the move are bound to send positive waves.
Downside risks include the possibility of China underperforming, along with Europe’s economic woes, although Bernal-Leon sees Euro effects as unlikely.
“Europe is pretty much irrelevant for commodities,”  Bernal-Leon said – unless, he added, the euro were to collapse. In which case, “All bets would be off.”

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