CFI joins growing Gulf expansion into Latin America

• Stable region proves attractive
• Digital trading platform live in Colombia
• Brazil serves ‘as a springboard’

With Dubai’s online trading platform CFI Financial Group opening in Colombia and Brazil, chief executive Ziad Melhem has said Latin America resembles the Gulf states of yesteryear.

“It is two parts of the world arriving at the same inflection point, just a few years apart,” Melhem told AGBI.

“The Gulf has spent the last two decades building a modern financial infrastructure,” he said. “Now we look across the world and see that the regulations in Latin America are mature.”

CFI Financial Group, founded in 1998, supports trading in stocks, fiat and cryptocurrencies, and other asset classes. It operates from various cities including London, Abu Dhabi, Cape Town, Baku, Beirut, Amman and Cairo.

The company is among a wave of Gulf-based businesses that have launched or expanded in Latin America in recent weeks.

UAE logistics giant AD Ports Group bought a Brazilian port terminal operator, Corredor Logística e Infraestrutura (CLI), for AED3.1 billion ($835 million) earlier this month. Dubai’s DP World increased by $100 million a previous $760 million investment pledge into the Dominican Republic’s free trade zone.

Qatar Airways said it will start twice-weekly flights to Bogota in Colombia and Caracas in Venezuela next month, while officials from Manara Minerals, a joint venture between Saudi mining conglomerate Maaden and the Public Investment Fund, have been searching for opportunities in Latin America for months.

Gulf investment in the region is driven by long-term strategies to secure supplies of food and other vital commodities and to build global logistics centres, said Najad Khouri, a Brazilian economist and Middle East expert. The investments tend to focus on agriculture, energy, mining and infrastructure.

Months of turmoil in the Middle East due to the US-Israeli war with Iran and the closure of the Strait of Hormuz have only made Latin America’s political, social and economic stability more attractive, Khouri said.

“Middle East-Latin America long-term investment planning involves an exchange of innovation,” Khouri said. “Latin American fintechs and agritech companies are drawing backing from Gulf venture capital, while Brazil’s thriving money market is attracting more attention.”

CFI’s digital trading platform went live in Colombia on May 7, but the company is still working through a months-long set-up process in Brazil. Securing a licence at the end of April took three to four years, Melhem said.

“Colombia is where we plant our roots for this region,” Melhem said. “This is a first step that lets us build a relationship … and lay the groundwork before we widen our presence further.”

Brazil is the largest economy and deepest financial market for retail investors in Latam, Melhem said, citing internal research that identified 5 million active traders.

“That’s where our Latin America story really grows,” he said.

Online trading platforms in Brazil are expected to generate more than $1 trillion in revenue by 2033, up from about $550 million last year, expanding at a compound annual rate of 8.3 percent, according to research firm Grand View Horizon.

Further reading:

• AD Ports enters South America with purchase of Brazil’s CLI
• QatarEnergy invests in Uruguay offshore blocks
• South American trade bloc turns to UAE as other deals falter

“The notion that Brazil serves as a kind of springboard to potentially operating elsewhere in the region, I think is important to follow,” said Kevin Funk, a political economist and lecturer at Columbia University in New York.

“It is interesting insofar as the Brazilian economy in general and the financial sector in particular are quite heavily regulated,” Funk said. “To achieve this sort of authorisation is not necessarily easy or straightforward, and it does seem significant in that way.”

More broadly, Funk said recent Gulf deals in Latin America fit “into a longer story of growing commercial relations” between the two regions over the past decade or more.

A push to diversify trade routes and partners, against the backdrop of Middle East instability and global macroeconomic uncertainty, is accelerating that trend, Funk said.