LatinFinance - September/October 2016 - 13

COVER
STORY
After years of gloom, investors are now beginning to embrace Latin
America once again. As signs grow that the region is approaching a
turning point in the economic cycle, already some portfolio investors
are plunging in. By Katie Llanos-Small

Time to
jump
back in?

W

hen New York's stock market opened on June
24, virtually no-one expected the day's shock news to be a boon for
Latin American investment.
Traders dumped assets, sold the pound, piled into US Treasuries.
Ecuador postponed a bond sale. Mexico slashed 32 billion pesos
from its 2016 spending plan.
But then the world's central banks leapt into action, promising
cheap money for longer in a bid to stabilize markets. Investors
reacted in the same way they have since quantitative easing was first
tested in 2009: they turned to emerging markets in search of yield.
The European Union, and indeed the world, is set for a long
period of uncertainty after the United Kingdom voted to leave
the trading bloc. But after the initial shock of Brexit faded, the
implication for Latin America was a sharp rally in the region's
markets. The rapid reassessment of the risk-reward balance in
LatAm came as economists began to see an inflection point in the
economic cycle. After years of recession the region may, finally, be
on the brink of happier economic times, they say.

A move away from populism in Argentina and Brazil, a
stabilization in commodities markets and the prospect of easier
financing all point to better economic growth - and investment
performance - across Latin America, says Jan Dehn, head of
research at Ashmore Investment Management. "There's going to be
a strong and sustained performance coming out of EM investments,
and within that, Latin America is the most interesting." Indeed,
in July Ashmore proclaimed the region was "the best investment
proposition in the world today".
But many remain cautious. If the anti-globalization angst that
drove Brexit were to prevail in US elections in November, the
region's trade expectations could be rapidly rewritten, almost
certainly spelling a return to recession.
"Latin America doesn't operate in isolation from the rest of
the world," says Michael Shifter, president of the Inter-American
Dialogue. "There are a lot of ways in which they'll be negatively
affected. Just the heightened uncertainty in the global economy is
not going to be helpful for the path that most of Latin America is
September/October 2016 - L ATINFINA NCE.COM 13



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Table of Contents for the Digital Edition of LatinFinance - September/October 2016

Contents
LatinFinance - September/October 2016 - Cover1
LatinFinance - September/October 2016 - Cover2
LatinFinance - September/October 2016 - Contents
LatinFinance - September/October 2016 - 2
LatinFinance - September/October 2016 - 3
LatinFinance - September/October 2016 - 4
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