Transactions down 72.9 %

PANAMA. Panama’s Stock Market (Bolsa de Valores de Panama, BVP) registered a 72. 9 percent decline in trading, and an 18. 3 percent fall in its stock index during the first two months of 2009 compared to the same period last year, acccording to a report by the Comptroller’s Office.

The decline in trading started in September 2008 and continued through today.

Faced with these figures, the president of BVP, Roberto Brenes, recognizes that the effects of the global financial crisis have hit Panamanian shores, reducing trades in the local stock market.

The economist Felipe Chapman explained that in some cases, investors searching for capital sold their stocks below the market price, reducing profits.

Chapman explained that local banks covered in 2008 the capital needs of companies, which reduces the local stock market’s role as a source of funds.

However, for other experts, this trend does not directly respond to the effects of the financial crisis, but to local factors.

“The BVP reacts more to the local reality than to an international one,” said a source that asked to remain anonymous.

The general manager of Interbolsa, Andres Zuñiga, explained that the market’s behavior has led many potential buyers to abstain from trading, preferring to keep cash.

On that line, potential sellers are waiting for a better time to sell their stocks at more profitable prices.

HSBC’s purchase of Banistmo also influenced the marked difference of volume traded in the first two months of 2009 compared to the same period in 2008, since it led to a rise in transactions of 176.2 percent compared to the same period in 2007.

An expert also claimed the participation of “the bad guys of speculation” is missing in Panama’s stock market, which makes the market more attractive and competitive.

He added that speculators are important in stock markets because they increase profitability.

Amid these outlook, many experts agree that not all has turned sour, as stricter lending practices by banks will translate into a greater role for the stock market in raising capital.

Currently, according to the National Securities Commission, procedures are under way for 12 companies to issue stocks, which once placed on the local market, will bring a higher level of tradable volume.