Emerging markets have for many years been arguably the greatest engine of global growth, and now account for about half of global GDP – though still a much more modest proportion of global market capitalisation. While a large part of that has been driven by the emerging markets of Asia, and China in particular, Latin America has also very much played a strong part in the secular trend.
In recent years, as participants in this roundtable attested, the opportunity set in Latin America has been evolving impressively. Not long ago, the economies of LatAm were heavily reliant on the export of basic commodities. There are still very big producers of commodities all across the region, but that is now far from being all they are about.
Especially in bigger markets like Brazil and Mexico, the disruptive technologies of the information-based new economy have firmly taken root, and the consumer society of the millennial generation has become arguably as sophisticated as anywhere in the world.
The financial infrastructure, at least in the bigger markets, has also become increasingly sophisticated – making possible an ever broader array of investment strategies.
For this roundtable, we were delighted to bring together such a group of top investment managers of diverse types, from bottom-up stock-pickers and long/short hedge fund managers in equities to more macro and fixed income focused players. They talked with much enthusiasm about the expanding opportunity set, and strategies to invest in it.
While Latin America and its markets may be vibrant, they are however also noted for their bouts of political instability – and intermittent periods of economic stress and crisis, such as we have been seeing in Argentina again in 2018.
LatAm has often been buffeted severely by sharp changes in global trends, especially by changes in the economy of the United States, the economic giant to the north. So, after the era of the financial crisis and unprecedented quantitative easing (QE) flooding dollars into the markets around the world, there are big question-marks again about how the end of that may impact LatAm.
Trade tensions between the US and China, with the latter now vying for economic leadership, may also spark some unpredictable side effects on the LatAm region.
All of these factors gave our panel of participants plenty of things to discuss with us and our partners at Scotiabank, who also brought some of their detailed knowledge and expertise in these markets to the debate. We hope you fund this resulting report illuminating.
Please browse the embedded version of the report below (best viewed in fullscreen) or fill out the form on the right to receive a PDF version via email.