REGIONAL REPORT


Regional Currency Investment Perspective on Latin America


BY RICHARD WILLSHER Choice, diversity and


uncertainty High GDP growth rates in Latin America are fuelling currency plays and investment opportunities across the region, though it is not all plain sailing.


Brazil leads the pack by virtue of the size of its economy relative to that of the other countries of the UHJLRQ ,W KDV EHQHÀWHG KXJHO\ IURP ULVLQJ SULFHV RI commodities on the world market and burgeoning demand from Europe and North America and particularly China, which in 2009 displaced USA as the country’s second largest export market.


JPMorgan’s Sebastian Luparia noted in a recent interview with Citywire, that three quarters of its exports to China are comprised of iron ore, pulp and soy beans which he regards as a major risk should demand from China weaken. However this masks the


74 Currency Investor | Autumn 2011


large and increasing diversity of Brazil’s economy and also the growth in its internal consumption. Among Latin American currencies Brazil remains a strong favourite with many investors and also plays a key UROH LQ JOREDO DQG HPHUJLQJ PDUNHW FXUUHQF\ ÀQGV


Argentina’s growth rate looks impressive but with presidential and legislative elections scheduled for 23rd October 2011 investors seem to be in wait-and- see mode. Moreover high net worth individuals are moving cash out of the country, buying property and other assets in Uruguay among other things. While $UJHQWLQD DV ZHOO DV %UD]LO LV FRQWLQXLQJ WR EHQHÀW JUHDWO\ IURP IRUHLJQ FXUUHQF\ LQÁRZV GHULYLQJ IURP its exports of high priced agricultural commodities, the politics are clouding the picture.


Not so Chile. Long regarded as a nice house in a sometimes not so nice neighboured, its status as a well managed and well funded economy makes it a popular destination for foreign direct investment.


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