Narayan AmmachchiU.S. equity funds are making significant investments in Latin American stocks, anticipating the emergence of business-friendly governments across the region, from Brazil to Colombia.
This influx of capital is driving stock values to new highs, particularly in Brazil, where political sentiment is shifting.
On Feb. 14 alone, foreign investors injected approximately 1.4 billion reais ($244 million) into Brazilian stocks following a poll that revealed President Luiz Inácio Lula da Silva’s approval ratings had reached a record low.
The trend reflects broader dissatisfaction with leftist parties in multiple countries, including Ecuador and Chile, leading investors to adjust strategies earlier than usual in the election cycle.
In Chile, which is set to hold elections in late 2025, President Gabriel Boric is struggling with low popularity, and early polls indicate a shift toward the center.
Colombia, set to hold elections in mid-2026, is witnessing increased market activity as analysts predict the electorate will favor a business-friendly administration.
Until recently, Colombian stocks were trading at record lows, but many companies are now experiencing a surge in share prices. Investment firms such as T. Rowe Price and Frontier Road Limited are reportedly positioning themselves in the Colombian market, according to Bloomberg.
Latin American stocks are valued at 8.6 times their 12-month forward earnings, significantly below the 10-year historical average of 11.5 times, based on Bloomberg data. In comparison, U.S. equities are trading around 21 times forward earnings, down from a multiple of 24 last year.
This discounted valuation is attracting a wave of investors, further boosting interest in the region’s stock markets.
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