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Peru has many of the economic ingredients needed for rapid expansion of the capital market, yet the authorities still need to channel efforts into making the Lima Stock Exchange (Bolsa de Valores de Lima, BVL) attractive to both businesses and investors. Since the turn of the new millennium, the number of listed companies has grown from 210 in 2001 to 277 as of June 2018. Of these, manufacturing (16%), finance (14%), public service (9%) and mining (8%) are among the most represented sectors. A handful of firms tend to dominate each of these categories. For example, Southern Copper Corporation, a mining company, comprises almost 25% of the entire exchange’s value at $40.6bn; Credicorp Capital, a local financial services firm, has a market capitalisation of just under $21bn, or 12.7% of the BVL total; and Banco de Crédito, a Peruvian bank, has a market cap of $17.2bn – equal to 10.5% of the total. This chapter features interviews with Marco Antonio Zaldívar, Chairman, Lima Stock Exchange; and Jorge Ramos, General Manager, BBVA Continental Bolsa; and President, Association of Peruvian Brokerage Houses.

Despite the deceleration of the Peruvian economy in 2017, driven in large part by the simultaneous impacts of the El Niño climate cycle and the corruption scandals related to Brazilian construction giant Odebrecht, the banking sector has remained stable. According to international credit ratings agency Moody’s, at the close of 2017 the sector was exhibiting sustained profitability, diverse earning sources and improved operating efficiency, with the annual report from the Peruvian Association of Banks recording a 4.7% increase in system-wide net income to PEN2.46bn ($757.4m). In 2018 the banking sector is expected to continue to act as an economic bellwether, maintaining positive indicators in terms of liquidity, solvency and efficiency. This chapter contains interviews with Julio Velarde Flores, President, Central Reserve Bank of Peru; Wilber Dongo, Central Business Director, Caja Arequipa; and Eduardo Torres-Llosa, General Manager, BBVA Continental.

After a political transition that threatened business confidence and investment projects, Peru’s economic outlook has improved considerably. As one of South America’s top performers due to its structural reforms and fiscal discipline, Peru is seeing an economic rebound due to rising commodity prices and its export-oriented mining sector. The Ministry of Economy and Finance (Ministerio de Economía y Finanzas, MEF) projects that GDP growth will accelerate from 2.5% in 2017 to 3.6% in 2018, bolstered by a 17.5% and 4.5% increase in public and private investment, respectively. The longer-term outlook is yet more optimistic, with forecasts for higher average growth and domestic demand over the 2018-21 period. The MEF forecast greater private investment will support fiscal consolidation efforts from 2019, reactivating the virtuous cycle of investment, employment and consumption. This chapter contains interviews with Luis Alberto Moreno, President, Inter-American Bank of Development; Alberto Ñecco, Executive Director, ProInversión; and Roque Benavides, President, National Convention of Private Business Institutions.

The banking sector experienced mixed results in 2017. Although bank loans and asset quality benefitted from the country’s ongoing economic recovery – with operating profits rising as a result – high provisioning costs and preparations for the new accounting standards that take effect in 2019 saw net profits decline for many larger commercial banks. The sector is resilient, well capitalised and liquid, but non-performing loans remain high, particularly for smaller businesses. According to S&P, 2018 is set to be a turning point for the sector, with macroeconomic expansion, stabilising asset quality and an anticipated increase in public investment likely to end the credit down cycle. Banks will experience gains in earnings as provisioning costs drop and loan growth recovers, with rising infrastructure investment expected to support broader industry expansion. This chapter contains an interview with Prasarn Trairatvorakul, Former Governor, Bank of Thailand; a dialogue with Predee Daochai, Chairman, Thai Bankers’ Association; and President, Kasikornbank; and Piti Tantakasem, CEO, TMB; and an interview with Antoine Gustin, CEO, BNP Paribas Thailand; and Chairman, Association of International Banks.

Macroeconomic recovery in Thailand gained momentum in 2017, with GDP growth hitting a five-year high on the back of a positive performance in exports, tourism and financial services, as well as a moderate uptick in private consumption. Meanwhile, the main index of the Stock Exchange of Thailand hit an all-time high on the first day of trading in 2018, returning to levels not seen since the 1997-98 Asian financial crisis. Under the auspices of new economic development strategies such as Thailand 4.0 and the Eastern Economic Corridor, infrastructure investment should further support expansion in 2018, with public spending on key transport projects set to surge, even as the government seeks private partners to help deliver billions of dollars of planned initiatives. This chapter contains interviews with Kanit Sangsubhan, Secretary-General, Eastern Economic Corridor Office of Thailand; Nishita Shah Federbush, Group Managing Director, GP Group; and Kalin Sarasin, Chairman, The Thai Chamber of Commerce and Board of Trade of Thailand.