Finance

Fair Shares

Capital Markets

Panama’s financial sector has come under intensified legal and investor scrutiny amid the reverberating effects of the release to the public of documents illustrating the role that several law firms […]

Panama’s financial sector has come under intensified legal and investor scrutiny amid the reverberating effects of the release to the public of documents illustrating the role that several law firms based in the country played in facilitating a global network of foreign-owned, non-disclosed assets. However, rather than showing any signs of a decrease in investor confidence, Panama’s financial market development was ranked number 15 in the world according to the World Economic Forum’s 2015-2016 Global Competitiveness Report. The Global Competitiveness Report also ranked Panama 40th for its financing through the local equity market, 19th in terms of the overall efficiency of the country’s financial markets, and 15th in terms of trustworthiness and confidence in the sector.

Panama’s securities trading platform, the Bolsa de Valores de Panamá, experienced mild contractions during 2015. The BVPSI Index, the main index of Panama’s capital markets which tracks the performance of the largest companies listed on the exchange, fell by 22.71 points during 2015, a 5.33% YoY decline from 426.12 points at the beginning of 2015 to 403.41 points at the start of 2016. After gaining a nominal 1.5 points through the first half of 2015, a 0.35% increase from 426.12 points at the beginning of 2015 to 427.62 points at the beginning of the second half of the year, the biggest drop in the BVPSI Index came in the third quarter of 2015 when the exchange lost 17.81 points, marking a 4.16% QoQ decline from 427.62 points at the beginning of the quarter to 409.81 points at the end of the third quarter. This downward trend continued into 2016 when the BVPSI Index fell by a further 10.85 points from 403.41 points at the start of the year to 392.56 points at the end of the first quarter, marking a 2.69% QoQ decline and an 8.18% fall from where the Index stood at the same point in 2015.
The $1.868 billion of new issuances on the Bolsa de Valores de Panamá during 2015 came from 28 new registered securities, an 8.6% YoY increase. Approximately 36.7% of these new securities were from first-time debt issuers, including Electrón Investment, S.A. ($235 million), Real State Investment Thrust, Inc. ($60 million), Fideicomiso Serie Alegrí­a BY Haus ($50 million), Banco Ficohsa, S.A. ($50 million), and Correagua Internacional, S.A. ($30 million). The newest issuers of equity shares on the exchange were CM Realty Sociedad de Inversión Inmobiliaria, S.A. ($39.9 million), Latin American Kraft Investments, Inc. ($25 million), Prima Sociedad de Inversión Inmobiliaria, S.A. ($10 million), Grupo APC, S.A. ($7.5 million), and Prival Real Estate Fund, S.A. ($5 million). The largest issuance of securities in 2015 came from Aes Panamá, S.R.L., which issued $375 million in recurring senior notes through BG Valores, S.A. and BG Investment Co., Inc. BG Valores, S.A. led all purchasing activities on the exchange with the $896.190 million in securities it acquired during 2015, while Prival Securities, Inc. led all sellers with the $806.668 million it issued during 2015.

The total volume of trades on Panama’s stock exchange stood at $5.247 billion at the end of 2015, a 0.18% YoY decline from the $5.256 billion traded in 2014. In terms of the market for securities listed on Panama’s stock exchange, the majority of the volume traded in 2015 took place through the market for primary securities. At $3.401 billion, the primary market accounted for 64.82% of the volume traded on the Bolsa de Valores de Panamá. This marked a 0.36% YoY increase from the $3.388 billion traded in 2014, which during that period represented 64.47% of the overall market volume. At $1.512 billion, the secondary market accounted for 28.83% of the volume traded on the stock exchange during 2015, marking a 7.54% YoY decline from the $1.636 billion traded in the secondary exchange market in 2014, which during that period represented 31.12% of the total market for publicly listed securities. At $333.4 million, repurchased securities accounted for 6.35% of the total volume traded on the stock exchange in 2015, signaling a dramatic rise of 43.89% YoY from the $101.7 million in securities repurchased in 2014, which during that year accounted for just 4.41% of the consolidated securities market.

In terms of the breakdown by sector, the large majority of the volume of Bolsa de Valores de Panamá is traded by the private sector. At $3.797 billion, the private sector accounted for 72.36% of the total volume traded on the stock exchange in 2015. This marked a 14.84% YoY increase from the $3.306 billion traded by the private sector in 2014, which during that period accounted for 62.89% of the overall volume of Panama’s market for financial securities. At $1.450 billion, the public sector accounted for 27.64% of the total volume traded in 2015, marking a massive 25.64% YoY decline from the $1.950 billion traded by the public sector in 2014, which during that period represented 37.11% of the total market for publicly listed securities.

In terms of the trading of private paper, bonds largely dominated Panama’s capital market in 2015, registering a total volume of roughly $2.226 billion that accounted for approximately 42.43% of the total market cap for securities listed on the stock exchange. This represented a 20.74% YoY increase from the $1,844.1 market cap of bonds listed on the stock exchange in 2014, which during that period represented approximately 35.08% of the consolidated securities market capitalization. Meanwhile, bond buybacks reached $321.642 million during 2015, representing nearly 14.45% of the market cap of the traded volume for bonds and roughly 6.13% of the consolidated market cap. This corresponded to a rise from 2014 levels, when the $205.358 million of bond buybacks represented just 11.14% of the market cap for bonds and only 3.91% of the consolidated market capitalization.

Securities from the treasury declined by from 25.98% YoY to $1.443 billion through the end of 2015, which accounted for 27.15% of the total market cap. This drop from the $1.950 billion market cap of treasury securities marked a significant shift in the configuration of capital concentration, where treasury securities in 2014 represented approximately 37.11% of the consolidated market capitalization. At $635.836 million, treasury notes were the largest component of treasury securities in 2015, accounting for 44.04% of the total category. This marked a 47.35% YoY decline from 2014, when the $1.208 billion market cap of treasury notes represented 22.98% of the consolidated market cap and 61.92% of all treasury securities. Treasury bills, at $620.082 million, accounted for 42.95% of the total category in 2015. This marked a 46.12% YoY increase from 2014, when the $424.632 million market cap of treasury bills represented just 8.07% of the consolidated market cap and 21.76% of all treasury securities. At $187.695 million, treasury bonds represented just 13.00% of the market cap for all treasury securities through the end of 2015. This marked a 41.04% YoY decline from the $318.348 million market cap of treasury bonds in 2014, which represented 6.06% of the consolidated market cap and 16.32% of the total category. Public external debt stood at $6.641 million on the Bolsa de Valores de Panamá through the end of 2015, while there was no public external debt listed on the stock exchange at the end of 2014.

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