LIMA, Sept 8 (Reuters) - Peru’s bourse has a “good chance” of staying in MSCI Inc’s emerging market category and avoiding a downgrade to a riskier status, the bourse’s general manager said on Tuesday following preliminary talks with the index provider.
MSCI said last month that it was seeking investor input on reclassifying Peru’s mining-dominated stock exchange as a “frontier market” because of low liquidity.
The stock exchange is pressing MSCI to hold off on making its decision - due by the end of the month - for three years while new policies aimed at boosting liquidity yield results, the bourse’s general manager, Francis Stenning, said.
Peru has scrambled to ward off a downgrade, which the bourse has said would trigger an exodus of capital of up to $5 billion within three months.
The country recently eliminated a tax on capital gains, effective Jan. 1, 2016, and eased restrictions on market makers.
“We’ve been talking with (MSCI‘s) specialists, which has helped them understand where we’re expecting the impact of these measures,” Stenning said in an interview.
“It’s been received well,” Stenning said. “I think we have a good chance of remaining an emerging market.”
A team of officials from Peru’s central bank, Finance Ministry and private pension funds will make the case for staying in the emerging market category to MSCI executives on Monday in New York, Stenning said.
The group will also meet with investment funds in the United States and London to deliver a similar pitch.
Peru’s select index has dropped nearly 30 percent this year as mining stocks have slipped on falling metal prices and worries about China’s slowdown. MSCI’s announcement has also hurt the index in recent weeks.
Reporting by Ursula Scollo, Writing by Mitra Taj; Editing by Leslie Adler