“You can say a lot of things about me, but you can never say I don't take risks” - Diego Maradona

MARKETS

June 5, End Of Day

• Argentina
  • S&P MERVAL Index = 2,124,156.07 (YTD = -16.16%)
• Brazil
  • BOVESPA Index = 136,236.37 (YTD = 13.26%)
• Chile
  • S&P IPSA Chile = 4,242.14 (YTD = 17.36%)
• Colombia
  • MSCI COLCAP = 1,655.95 (YTD = 20.03%)
• Mexico
  • IPC Mexico BMV = 57,777.49 (YTD = 16.69%)
• Peru
  • S&P/BVL Peru = 32,295.61 (YTD = 11.59%)

BUSINESS

Three Barriers Blocking Market Entry in Latin America

The World Bank’s Competition and Productivity Growth report explains the core challenge in Latin America: market entry is blocked by multiple layers of regulation, both for local entrepreneurs and foreign investors.

Three Layers of the Problem

1. Administrative burden on start-ups
   • Entrepreneurs in Latin America face complex, costly procedures just to launch.
   • The report highlights that it can take over 60 days to get a business license in the region, four times longer than in South Asia.
   • The cost of opening a business was 35% of income per capita, compared to just 4.3% in Europe and Central Asia.
2. Barriers in service and network sectors
   • Key sectors like telecom, energy, and transport are heavily regulated or dominated by entrenched firms.
   • These sectors often block new players through licensing restrictions, legacy rules, or strategic behavior by incumbents.
   • Even well-intentioned regulations can have unintended effects, lowering contestability and tilting the playing field.
3. Barriers to trade and investment
   • Despite decades of trade liberalization, tariffs and investment restrictions still act as exogenous barriers to market entry.
   • The report notes these distortions often arise from outdated industrial policies or protectionist lobbying.
   • As a result, new domestic firms struggle to scale, and foreign firms hesitate to enter.

These high barriers limit firm entry, reduce competitive pressure, and suppress innovation. Incumbents face little threat, and new ideas struggle to reach the market. Until these barriers are addressed head-on, productivity can remain stuck.

CURRENT AFFAIRS

Colombia: Colombia reduced deforestation by 33% in Q1 2025, cutting forest loss to 27,052 hectares. The drop is credited to stronger state and military presence and community agreements. The country remains one of the most biodiverse in the world, but faces ongoing deforestation pressures.

Argentina: Argentina’s year-end inflation is now forecast at 28.6%, down from last month’s estimate of 31.8%, according to the central bank’s survey. Analysts also slightly raised 2025 growth expectations to 5.2%. Inflation has eased from over 270% last year, boosted by investor confidence and recent bond sales.

Brazil: Brazil raised $2.75 billion in its second sovereign bond sale of 2025, issuing five- and ten-year dollar bonds amid declining default risk. The offering was four times oversubscribed, as the country’s CDS fell to its lowest level this year. Proceeds will help refinance debt and strengthen Brazil’s sovereign yield curve.

FURTHER READING

Check our recently published insights here.

⚡ White Gold Rush

Latin America holds 60% of global lithium reserves, key for EVs and clean energy. While Chile leads in production, Argentina and Bolivia face investment and policy hurdles.

Challenges & Opportunities:

🔹 Soaring demand but slow production growth

🔹 Water-intensive mining threatens ecosystems

🔹 Policy shifts: Chile nationalizing, Argentina attracting investors

🔹 Global race for control, with China leading

🔹 Sustainability efforts in new extraction tech & battery recycling

⏳ A limited window to turn resources into long-term gains.

🔍 Read more here.