European investment in LatAm stocks hits 15-year peak

{"text":[[{"start":5.28,"text":"European investors have poured more money into Latin American equities already this year than in any full calendar year since 2010, as the region benefits from being a “safe haven” from geopolitical crises elsewhere."}],[{"start":17.433,"text":"The net $3.6bn pumped into LatAm-focused mutual and exchange traded funds comes after investors withdrew a net $15.1bn from the funds over the previous 15 years, according to data from Morningstar."}],[{"start":30.48,"text":"Combined with strong market gains, it means the assets of European-domiciled LatAm equity funds have risen to $21.6bn, two-and-a-half times the $8.8bn they held at the start of 2025."}],[{"start":43.36,"text":"Much of the newfound enthusiasm is driven by Latin America’s traditional strength in commodities, with copper prices hitting a record high this week and oil prices topping $100 a barrel amid the ongoing US-Iran conflict centred on the Strait of Hormuz."}],[{"start":60.08,"text":"The previous trend of outflows from LatAm and heavy investment in the Middle East has now gone into reverse, said Eduardo Figueiredo, head of Asia and emerging market equities research at Aberdeen Investments. “The moment the war broke out [on February 28] was when LatAm started up again as a bit of a safe haven.”"}],[{"start":75.409,"text":"Madeleine Black, analyst at Morningstar, said: “Two forces have shaped Latin American equities this year: the Middle East conflict’s pressure on oil prices and the AI infrastructure boom’s demand for copper.”"}],[{"start":null,"text":"

"}],[{"start":86.08,"text":"Black said the chief beneficiaries were Brazilian oil company Petrobras and Grupo México, which controls the world’s largest copper reserves, “which together accounted for 40 per cent of the region’s return year-to-date”."}],[{"start":100.031,"text":"The duo have helped the benchmark MSCI Emerging Markets Latin America index rise by 33.4 per cent over the past 12 months, comfortably outstripping the 18.9 per cent gain of the MSCI World index, which covers 23 developed markets, and the 18.2 per cent rise in the S&P 500."}],[{"start":118.778,"text":"MSCI’s EM Asia index has performed better, though, returning 41.8 per cent over the same period, largely due to the region’s powerhouse chip manufacturers, such as Taiwan’s TSMC and South Korea’s Samsung Electronics and SK Hynix, a sector LatAm lacks."}],[{"start":null,"text":""}],[{"start":134.87,"text":"However, Mike Simpson, head of Latin American equities at Barings, said that even this had an upside for the region, particularly with the big three chipmakers now accounting for 35.5 per cent of the Asian benchmark and the US stock market already dominated by tech stocks."}],[{"start":151.827,"text":"“Latin American equities offer diversification benefits. The region has been less influenced by the AI-driven concentration seen in some global equity markets, providing investors with differentiated sources of return,” he said."}],[{"start":164.64,"text":"Other factors are also at play, with the region’s political cycle seen as ushering in a more investor-friendly backdrop."}],[{"start":170.642,"text":"“Recent election outcomes in several South American countries have been viewed positively by markets,” said Simpson. “Chile, Peru and Colombia are recent examples where winning candidates are perceived as supportive of economic stability and market-oriented reforms.”"}],[{"start":185.777,"text":"Figueiredo also pointed to potential political change in the two countries that dominate the MSCI index."}],[{"start":192.016,"text":"In Mexico, the government has become more “pragmatic” under President Claudia Sheinbaum, despite her hailing from the same leftwing party as predecessor Andrés Manuel López Obrador, he argued."}],[{"start":203.214,"text":"In Brazil, incumbent Luiz Inácio Lula da Silva faces a strengthening challenge from Flávio Bolsonaro, son of the previous president, who is seen by many as more market-friendly, in October’s election."}],[{"start":215.451,"text":"And despite the recent solid gains, LatAm stocks remain cheap, with the MSCI index currently trading at 12.5 times historic earnings, compared with 22.5 for the Asia index, 26.3 for MSCI World and 30.3 for the S&P 500."}],[{"start":230.72,"text":"Risks always remain, with Simpson positing a sustained rise in global bond yields, a less market-friendly election result in Brazil and, for Mexico, an unfavourable outcome to an ongoing review of the US-Mexico-Canada trade pact as potential threats."}],[{"start":245.92,"text":"Despite this, he added that LatAm “generally faces fewer geopolitical tensions than many other parts of the world, which can be appealing in periods of global uncertainty”."}],[{"start":257.76,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1789191688_8835.mp3"}