Narayan AmmachchiGlobal investors continue to place large bets on Latin American stocks and bonds despite the recent rise of left-leaning governments accross the region.
Major stock indexes in Latin America have gained more than 8% this year, while the broader index of emerging market shares is down 29%.
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Rising commodity prices and cheap valuations for quality stocks could be tempting investors to pour money into share markets, particularly in Brazil.
When it comes to currencies, Brazil’s real is the top performer, rising 9% against the US dollar so far this year.
Investors continue to dismiss warnings against the possible economic impacts of policy changes by left-leaning presidents in the region, pointing to a lack of support in their respective legislatures as a major reason.
Brazil’s stocks, for example, climbed further even after the country elected leftist Lula da Silva as President, with some market analysts describing his proposed policy changes as “mere political rhetoric.”
“Latin America feels like a more traditional emerging market investment right now,” Daniel Wood, emerging market debt portfolio manager at William Blair Investment Management, told Reuters.
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