Latin Finance - July/August 2010 - 10

equity/debt fund performance

Buy the Dips
by Ben Miller

Fresh crisis in the developed world whips up technical headwinds for LatAm. Dedicated funds are flush and hunting bargains, hoping fundamentals are not impacted.
atin America’s fundamental strength and ability to withstand external shock is a broken record that has been playing since 2008. Dedicated buyers were caught offside by the panicked selling that year – many losing most of the prior years’ heady gains – but they are undeterred in the latest slump, ready to commit stockpiled inflows to sourcing relative bargains in LatAm debt and equity. “These are the opportunities we wait for,” Adam Kutas, who manages Fidelity’s $1.14 billion LatAm equity fund, tells LatinFinance. “It’s healthy to shake out some of the frothiness,” he adds. “Latin America remains underestimated potential with overestimated risk,” says Luis Carrillo, head of LatAm equity at JPMorgan Asset Management, which oversees $5 billion. Correlation with global markets creates a drag on prices, despite healthy LatAm balance sheets and Asia-like growth in some of the bigger economies like Brazil. Buying dips remains challenging, but investors are overwhelmingly positive LatAm, which yielded spectacular gains in the upswing before the European sovereign crisis erupted. They are aided by inflows fueled by the elevation of emerging markets from high risk backwater to high priority staple for global portfolio managers struggling with G7 turbulence and keen

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to secure long-term growth. Fixed income investors are toppingup on their favorite names from the region. Depending on an individual fund’s strategy, these can be high-quality sovereigns and blue chip corporates, or higher-yielding assets like Argentina and Venezuela. Analysts note activity in investment grade names, including defensive regional plays like América Móvil and some stronger commodity credits that may have sold off too much, such as Petrotrin, Vale, Southern Copper or Brazilian steelmakers. “There has been more liquidity in the investment-grade space than in the highyield space,” says Bevan Rosenbloom, EM corporate strategist at RBS. He notes a flight to safety in LatAm credit, but adds that liquidity has not been deep enough in high yield to enable significant flight. Equity investors are similarly taking advantage, with a focus on small and mid-caps with growth potential, such as homebuilders in Brazil and Mexico, and retailers throughout the region. Defensive stocks like telecoms are also popular. Particularly attractive are companies in markets beyond regional heavyweight Brazil, where there might be a little more value. However, politics, inflation and structural weakness are just some of the lingering challenges. The bigger risk is

10 LatinFinance

July/August 2010



Latin Finance - July/August 2010

Table of Contents for the Digital Edition of Latin Finance - July/August 2010

Latin Finance - July/August 2010
Contents
Equity/Debt Fund Performance
European Investors
Brazil Domestic Buyside
Mexican Domestic Buyside
Mexico Venture Capital
CEMEX CFO Interview
Panama Investment
Canadian Miners
Peru Investor Report
Peru is Making Strides to Develop Gas and Oil
Microfinance Volume Rises at a Steady Clip
Latin Finance - July/August 2010 - Latin Finance - July/August 2010
Latin Finance - July/August 2010 - Cover2
Latin Finance - July/August 2010 - Contents
Latin Finance - July/August 2010 - 2
Latin Finance - July/August 2010 - 3
Latin Finance - July/August 2010 - 4
Latin Finance - July/August 2010 - 5
Latin Finance - July/August 2010 - 6
Latin Finance - July/August 2010 - 7
Latin Finance - July/August 2010 - 8
Latin Finance - July/August 2010 - 9
Latin Finance - July/August 2010 - Equity/Debt Fund Performance
Latin Finance - July/August 2010 - 11
Latin Finance - July/August 2010 - 12
Latin Finance - July/August 2010 - 13
Latin Finance - July/August 2010 - 14
Latin Finance - July/August 2010 - 15
Latin Finance - July/August 2010 - 16
Latin Finance - July/August 2010 - European Investors
Latin Finance - July/August 2010 - 18
Latin Finance - July/August 2010 - Brazil Domestic Buyside
Latin Finance - July/August 2010 - 20
Latin Finance - July/August 2010 - 21
Latin Finance - July/August 2010 - 22
Latin Finance - July/August 2010 - 23
Latin Finance - July/August 2010 - 24
Latin Finance - July/August 2010 - 25
Latin Finance - July/August 2010 - Mexican Domestic Buyside
Latin Finance - July/August 2010 - 27
Latin Finance - July/August 2010 - 28
Latin Finance - July/August 2010 - Mexico Venture Capital
Latin Finance - July/August 2010 - 30
Latin Finance - July/August 2010 - CEMEX CFO Interview
Latin Finance - July/August 2010 - 32
Latin Finance - July/August 2010 - 33
Latin Finance - July/August 2010 - Panama Investment
Latin Finance - July/August 2010 - 35
Latin Finance - July/August 2010 - 36
Latin Finance - July/August 2010 - 37
Latin Finance - July/August 2010 - 38
Latin Finance - July/August 2010 - Canadian Miners
Latin Finance - July/August 2010 - 40
Latin Finance - July/August 2010 - 41
Latin Finance - July/August 2010 - Peru Investor Report
Latin Finance - July/August 2010 - 43
Latin Finance - July/August 2010 - 44
Latin Finance - July/August 2010 - Peru is Making Strides to Develop Gas and Oil
Latin Finance - July/August 2010 - Microfinance Volume Rises at a Steady Clip
Latin Finance - July/August 2010 - 47
Latin Finance - July/August 2010 - 48
Latin Finance - July/August 2010 - Cover3
Latin Finance - July/August 2010 - Cover4
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