LOS ANGELES (MarketWatch) — An exchange offering stocks from Chile, Colombia and Peru is slated to start operating next week after months of technical and legal hurdles, seeking to capitalize on surging investor interest in the region.

The Mercados Integrados LatinoAmericanos exchange, scheduled to begin operating on May 30, will tie together the three countries that “really are the emerging part market of Latin America,” according to Bruno Del Alma, chief executive of exchange-traded fund firm Global X Funds.

The combination of the exchanges, dubbed MILA, “was a big factor in terms of us thinking about the region, but it underpins a much broader story about both the growth rates and growing political and economic integration across those three markets,” he said.

For companies aiming to raise funds, the integrated exchange will be able to increase the number of potential investors, said Alfredo Coutino, director of Latin American research, at Moody’s Economy.com.

“So now … a Chilean company can go to the stock exchange and get money directly from Colombian investors,” he explained. “There’s a long list of companies in these three countries that want to go to each of these markets.”

Earlier this year, in anticipation of the new exchange, Global X launched the Global X FTSE Andean 40 ETF AND, -4.11% , the first ETF focused on the Andean region. Chile, Colombia and Peru are three of the biggest markets in the region that’s home to the longest continental mountain range, the Andes.

Investors in Latin American assets not only want exposure to assets linked to the region’s natural resources, but also they aim to benefit from of its expanding middle class, analysts indicated.

Peru, whose main export is gold, and Chile, the world’s largest copper producer, are expected to have the fastest rates of economic growth in Latin America this year, with the International Monetary Fund forecasting Peru’s expansion at a rate of 7.5% and Chile’s at 5.9%. The IMF expects the countries to lead growth in Latin America in 2012.

Politics

Investor enthusiasm for the region has been strong, driving stocks to double-digit gains last year. But so are the headwinds.

Peruvian stocks are facing a tough few months if Ollanta Humala, a presidential candidate who ran on a populist platform in his 2006 campaign, wins the upcoming election. The exchange is expected to start operating just days before Peruvians go to the polls.

“If Humala is elected in June, you will have a period in which foreign investors,” along with other market players, will be “in a wait-and-see” mode, according to Salvador Arenas, an equity research analyst at Chilean brokerage Larrain Vial.

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Peruvian stocks, as gauged by Lima’s broad general index, fell by as much as 15% for the year in U.S.-dollar terms in the weeks after Humala became the front-runner in first-round voting in late March. The index has reduced its loss for the year to date to about 6%, in the wake of polls showing center-right candidate Keiko Fujimori gaining the advantage. Fujimori is a member of Peru’s Congress and daughter of the jailed former president, Alberto Fujimori.

Though Humala has positioned himself as more of a moderate in this year’s campaign, the former army officer previously has called for renegotiating the terms of agreements with mining and energy companies — inviting parallels to the platform of once-close ally Hugo Chavez, the president of Venezuela.

In addition, concerns about a Humala win are being reflected in neighboring markets, said Arenas. “You have Chilean retailers with exposure to the Peruvian market,” including Cencosud SA, Falabella and Ripley SA, he pointed out. Some pressure on the stocks have contributed to a nearly 3% fall in Chile’s IPSA equity index this year.

The recent pullback follows a torrid ride for Andean markets. Last year, the broad general index of the Lima Stock Exchange (IGBVL) jumped 65% in local-currency terms, and by 69.8% in U.S. dollar terms. Chilean and Colombian stock benchmarks also rallied more than 30%, making the three Andean markets among the top-performing emerging markets since the end of 2000.

Investor demand for stocks in the region has pushed exchange operators in Chile, Colombia and Peru to link up.

With its launch, MILA will become the exchange with the most listings in Latin America. The combined market capitalization of the stocks it expects to list should make it the region’s second largest, after Brazil’s Bovespa (BVSP), run by BM&F Bovespa (BVMF3).

Daily trading volume on MILA is expected to reach $300 million, according to a presentation from the exchange. The roughly 560 stocks it expects to list will include those found on each of the market’s equity benchmarks, such as Chilean heavyweights Empresas Copec SA and Sociedad Quimica y Minera SA SQM, +3.41% , Peru’s Compañía de Minas Buenaventura SA BVN, +0.65% and Colombia’s Bancolombia CIB, +2.03%

The prospects are particularly bright for stocks of less-liquid companies from Peru and Colombia, with “many [smaller] companies that are now appearing on the radar screen” of pension funds in the larger Chilean market, said Jack Dzierwa, co-manager of the U.S. Global Investors Global Emerging Markets Fund GEMFX. “A combined entity that helps cross-listing makes sense.”

The new exchange looks to pick up some of the recent fervor for the region’s growth prospects, which until recently have been overshadowed by Brazil. Late late month, the three countries and Mexico moved to strengthened trade ties with the signing of the Pacific Accord trade agreement.

Earlier this month, Colombia won an investment-grade credit rating from Standard & Poor’s, regaining the status that it lost in 1999. Chile is in the middle of a boom in initial public offerings, with 10 to 20 companies expected to go public this year; Peruvian stocks outpaced the 20 other countries tracked by the MSCI Emerging Market Index last year.

The idea for an integrated trading platform has been in the works for years, but an agreement in November ushered in a testing phase. The exchange has faced a few delays, including a hurdle in December when the Lima Stock Exchange suspended its place in the merged platform until Peruvian lawmakers created a standard capital-gains tax rate at 5% for local and foreign investors, streamlining them from rates between 5% and 30%.

With tax issue cleared and MILA about to launch, exchange officials say the single market will “create a single, diversified, more liquid and more attractive equity market for local and foreign investors and for regional issuers,” according to a presentation by MILA in March. Exchange officials did not return requests for interviews.

Investors have bought into the growth story. Chile’s IPSA equity index (IPSA) — widely considered a safe-haven market with hefty exposure to the defensive sector of utilities — surged 37.5% in 2010 as investors sought construction and real-estate issues as the country rebuilds after a February 2010 earthquake and tsunami.

Colombia’s benchmark stock index gained 33.6% in local currency and 42.1% in U.S. dollars last year.