Spanish Conglomerates Conquer Latin American Markets

Following the footsteps of Spanish conglomerates focused on Latin America, Telefonica Media, the media arm of Spanish telecom giant, Telefonica(TEF Quote), announced last week that its IPO is coming as soon as April. The IPO will be in Spain -- not in Latin America -- the region Spanish conglomerates hope to dominate.

It's not an isolated incident: Telefonica and other Spanish companies are buying up Latin American corporations with remarkable speed. However, the more they buy results in fewer companies on the local stock markets. While this consolidation may spell profits for investors today, it is possibly sowing the seeds for greater regional economic volatility.

Greater consolidation by ex-Latin American companies translates into fewer companies in the region, lower stock market liquidity and, therefore, fewer opportunities for international investors looking for pure regional plays. A greater effect is that with less money coming in from both local and international investors, there is less money to fuel growth in smaller, local businesses that provide the bulk of jobs and foster competition. One of the ingredients for sustainable development, according to the World Bank, is the development of sustainable local capital markets. ...