Latin America is one of the hottest destinations for FX brokers, with access to nearly 600 million people. Given numerous barriers to entry, Peru has established itself as a market on the rise – BMFN’s CEO Luis Sanchez details the country’s ascendency.
1. Can you give us some background on Peru and provide some prelude for its present advancing role in financial markets?
When I left my native Peru 10 years ago, the country and its economy were very gradually advancing on a path toward shedding its “third world country” and “developing nation” descriptors. While financial living conditions were not the best in Peru, Peruvians had faith that one day, we would rise as a nation and become a significantly better place to live and work. We imagined that foreign investment would eventually increase as our own faith, drive, and internal investments began to bear more fruit.
And indeed, this acceleration is now upon us. Over the past ten years, the nation and institutions of Peru have received and experienced a lot of new foreign investments, resulting in new work and employment opportunities across the population, and catalyzing an unprecedented experience of internal “flow”. Tourism has continued its rise in the aftermath of Machu Pichu being named one of the Seven Wonders of the World, and the Peruvian government has invested a lot in tourism in all parts of the country. Peru is increasingly known for its traditional and emerging food scene, and the country is considered globally to host among the world’s best cuisines.
These are just a few summary indicators about Peru’s increasing “shine” over the past decade.
2. What are the challenges Peru faces as a bourgeoning outlet in Latin America?
Equally as important to notice, but perhaps not as widely visible, is this: Just ten years ago, it was extremely challenging to find any person living in Peru who had assets worth over one million U.S. dollars (USD). Within Peru, one million USD was considered such a large amount that it was nearly impossible for anyone even to imagine what a person would need to do in order to be able to earn that amount. Today, on the other hand, 25,000 Peruvians each possess over one million USD in assets. Yes, twenty-five thousand people! That’s just one indicator of growth in a class of affluence over the past ten years!
Another indicator worth noting is immigration vs. emigration: Years ago Peruvians tried to exit the country looking for new opportunities in Europe and USA and now the majority are returning back and contrary, today these foreigners are looking for new opportunities in Peru.
Today in Latin America (encompassing about 8% of the worldwide population), 15,100 people have assets over 30 million USD. Among others, this includes more than 4,725 in Brazil, more than 1,050 in México, more than 1,050 in Argentina and 775 people in Peru!
Consider these additional indicators of growing wealth and assets among people in Peru: 1,730 people have over 1 million soles (USD 350,000 ); three thousand (3,000) companies had income over 20 million soles (USD 7 million ), and 500 of these companies had over 200 million soles (USD 70 million). Another example: The minimum denomination offered to families by banks to invest in bonds is 100,000 USD.
Filling the Gap Between Brokers, LPs, and ClientsGo to article >>
3. What role do banks or liquidity providers play in Peru?
With growing wealth, private banking has entered strongly into the Peruvian economic landscape. Private banking has offered the Peruvian people two emerging key resources: 1) consulting and 2) new ways to make investments. Private family banks and offices are competing with giant global institutions UBS, JP Morgan, and HSBC as entities available within Peru now to manage and invest the growing new Peruvian affluences.
And even as such traditional avenues for investment such as classical banking products have penetrated and expanded more deeply and widely into Peru, many ambitious Peruvians on wealth’s cutting edge who are passionate, innovative, enthusiastic, and willing to take calculated risks are clamoring for new, alternative ways to invest and maximize assets. Specifically, they are exploring beyond the borders of Peru, looking to places like the U.S. and Asia to see what kinds of financial investment vehicles are new or available there. This emerging class is wondering: Where and how can I invest in ways that honor my willingness to take some measured risk for potentially great and/or steady reward(s)?
Another lens that helps one understand the general Peruvian readiness, culture, and non-timid attitude toward risk is: the casino sector of the economy. Peru is home to just about 700 casinos and slots machines. Proportionately speaking, this is a large number. This is approximately 10 times the number of casinos in Las Vegas – one of the financial/cultural risk-taking centers of the world, and home to approximately 72 casinos. My wife used to serve as the marketing director of a high-profile casino in Lima, Peru, and she said that clients there would routinely change USD 10,000, often on a daily basis. This is just one additional way to understand what is happening financially and culturally – and the current potential for very high receptivity to expanded alternative-investment-related services and products – in Peru.
In the past ten years, since I left Peru, I have come to Peru on average about once each year. As such, I have been able to see the incremental and steady nature of the progress that the country is making financially.
4. What is the FX landscape like in Peru?
About five years ago, I was struck by a clear vision of impending, deepening country-wide awareness about – and receptivity to – the concept of FX investment within Peru: almost like a fruit that was on the brink of becoming perfectly ripe for eating. I could clearly see that the Peruvian and Latin American markets were maturing, getting ready to assimilate, and showing growing interest in FX investment. Peruvians were becoming ready to explore the concept of trading via online trading platforms. It was the right time – five years ago – to lay significant groundwork and to accelerate the development of an FX market in Peru.
Today in Peru, you do find many FX brokers, and you hear that more and more will enter the market in the upcoming years. For example, we at BMFN will establish a catalytic presence in Peru extremely soon. The fact that some other brokers have entered this market first has been very good for them and is also very good for those who are coming into the market now or shortly, since those early brokers helped pivotally to develop the FX market category itself within Peru and helped open and educate the minds of some Peruvians regarding what FX investments are all about.
A perfect example: My cousin called me three weeks ago to congratulate me on my new position of CEO with BMFN, and after a quick chat, I asked him if he knew about BMFN. He replied to me: “No, what is that?” I replied that BMFN is an FX brokerage house. I could immediately hear his smiling voice as he said, “I know what FX is.” I was a little shocked, and I said, “You know what FX is?” He told me: “Yes, Luis, even I have an account using MT4.” Really?! And I asked as curiosity, “Since when have you had your account and how much is in it?” He told me that he’s had the account for 2 years, and that it is currently valued at USD 90,000. He also said that approximately forty (40) of his F&F (friends and family) have accounts in FX, with amounts fluctuating from USD 15,000 to even USD 2 million. I must say, I was speechless – both impressed and feeling validated, as I really did see this kind of capacity and receptivity within Peru coming before it began blossoming. So, please take this illustration and the others I’ve shared in this article as demonstrations of the increasingly realized potential of the country of Peru and FX.
Honoring this prescription for more FX education of the people of Peru (and Latin America overall), BMFN has entered into a mindful partnership with Tutores-fx.com to make online courses available to our target new stakeholders starting December 1st. The idea is to provide them more information concerning the financial markets, including FX and alternative online platforms to invest. We also have established a partnership with investing.com to target Peru (and surroundings) with a different concept, so stay tuned (!), more coming soon…
If you ask me: “Luis: What will happen in Peru in the coming years?” I will say: One, the economy will continue its growth, with 50,000 Peruvians each possessing over USD 1 million, quite soon.