Since its creation in 2011, the Pacific Alliance of Chile, Peru, Colombia and Mexico has grown into what many consider a blueprint for regional integration, where efforts to harmonise financial markets work alongside international trade agreements.
These efforts are building on generally healthy levels of financial services foreign direct investment (FDI) into the individual countries. Despite the economic troubles experienced across Latin America, from which Pacific Alliance members have not been immune, FDI into their financial centres endured and is picking up again, according to estimates by greenfield monitor fDi Intelligence.
Mirroring economic data, financial services FDI in the four countries bottomed out in 2017 at $519m and capital expenditure for the first five months of 2018 has already comfortably surpassed 2017’s total, with $595m. Should this pace continue until the end of 2018, flows into the Pacific Alliance financial hubs might near the 2013 peak of $1.6bn.
Mexico City remains the largest magnet for financial services FDI among the Pacific Alliance countries, recording $92.2bn between January and May 2018. This is already more than double 2017’s total. While almost all of 2017 Pacific Alliance flows went into Mexico alone, 2018 is painting a more diverse picture, with the main financial centres of Chile, Colombia and Peru improving their performance.
So far this year, Spain’s Banco Sabadell and New York-based Citi are the biggest investors in the Pacific Alliance countries, both expanding across Mexico. European and US investors remain the largest across all countries, directing flows to Santiago, Bogota and Lima too. Of note, however, is South Korea’s Shinhan Bank, which in March announced the opening of a new branch in Mexico City.
