Stock exchanges of São Paulo and Hong Kong will work together in 2012

Brazilian stock exchange in São Paulo

Brazilian and Hong Kong companies may be able to list shares on each others’ local exchanges from January 2012, Brazilian newspaper  Journal Valor reported on July 12th.

Brazilian and Asian bourses are working together to create “two centers of liquidity simultaneously,” said the BM & F Bovespa CEO Mr. Edemir Pinto.

A little strange that I could not find a confirmation of this news on the Hong Kong website.

The only note I was able to find on the Asian stock exchange dates June 11. Acording to a press release Brazilians would be “in talks”with Shanghai and Hong Kong stock exchanges and “likely to reach an agreement with Shanghai by the end of 2010, sources reported, citing Paulo Oliveira, CEO of Brazil Investments & Business.”  The asian Standard Finance has a note on the agreement, but the source is the same Journal Valor in Brazil.  Well, let’s keep an eye on this.

Size matters

The fact that Brazilians are more excited about this agreement than the Asian counterpart, gives as a clue of which one is bigger.The Stock Exchange of Hong Kong is the second largest in the world in capitalization, with a market value of $ 17 billion. BM & F Bovespa occupies the fourth place ranking with $ 13 billion.The Brazilian market has 469 listed companies, including the OTC market, while Hong Kong has 1300 companies.

Technical integration and regulation are key points

Brazil is ready for the comprehensive technical integration, but each party still needs a complete knowledge of local regulations.
The goal is to list actual companies and not the negotiation of roles through receipts. Therefore, according to Pinto, will not be BDR (Brazilian Receipts) of companies listed in Hong Kong but their own actions.

Strategic move to the internationalization of Brazilian Companies

The initiative, according to Mr. Pinto, is unique in the world. And the reason for choosing Hong Kong as well as being one of the world’s largest stock exchange, is the ability to keep the stock trading 24 hours a day.

Being listed in Asia will benefit Brazilian companies. It will mean more liquidity, lower risk and consequently, lower financial costs. International awareness will be also help these companies in marketing their products.

Vale is one Brazilian company that had plans to be listed in Asia. The mining company is already listed in New York and was the first Brazilian company in Paris Stock Exchange.

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About Hildete Vodopives

Hildete de Moraes Vodopives is founder of Brazil Global and of the Harvard Strategists. She is a member of the Brazilian Investment Analysts Association (APIMEC-Rio) where she served as Corporate Relations Director and later, on the board. Hildete advises companies doing business in Brazil.
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