Eyes drift towards smaller Latin American economies for investment opportunities

Written by Ray Clancy

Tuesday, 27 April 2010 10:00

Latin America still offers opportunities for investors as smaller economies emerge from behind giants like Brazil and Mexico, it is claimed.

Peru, Chile and Argentina have the potential to offer opportunities for investors following signs of economic recovery and growth in recent months. These smaller Latin American countries are poised to emerge from behind the shadow of their larger counterparts, according to F&C Emerging Equities fund manager Urban Larson.

‘While I remain positive on larger Latin markets such as Mexico and Brazil, I believe that the smaller countries could also present some exciting prospects. Chile was the top-performing Latin market in the fourth quarter 4 of 2009 and is recovering well from the recession,’ he explained.

Recent elections saw Chile’s first centre right president since the departure of Pinochet in 1990. New president Sebastián Piñera's pledge of structural reforms could be the catalyst which leads to higher long-term growth in the country, he believes.

Elsewhere, Larson is focussing on Peru and Argentina. He believes Argentina offers selective investment opportunities in companies that, while based there, do most of their business internationally, while Peru is particularly attractive as a v-shaped recovery takes hold after a period of disappointing growth between January and September 2009.

At stock level, Larson favours Chilean retailer Falabella, which is in a position to benefit from robust consumer spending in both Chile and Peru, along with Peru’s leading bank Credicorp and Argentine/Mexican steel producer Ternium.

‘I remain positive on the long-term outlook for Latin America and believe the majority of the region's markets, small and large, can continue to offer very attractive opportunities for investors this year,’ he concluded.

There is other evidence that the economy in Chile is doing well. A survey conducted by the National Chamber of Commerce shows a growth of 21% in investment projects at the end of December compared with June 1009 and 29% growth compared with December 2008. The growth represents an additional US$2.551 million dollars injected into the Chilean economy.

Also a recently released Forbes report that compared 2,000 of the biggest, most important companies registered in international stock exchanges, showed Chilean multinationals rising in rankings by an average of 177 places.