Where is the play?

Posted by Scriptaty | 12:58 AM

Analysts say given the economic mix ahead, Latin American countries that boast high domestic yields, deep domestic financial markets, current account surpluses, and a diversified export base (away from the U.S.), should bode well in the months ahead.

Which country fits this bill?

“Brazil looks attractive,” de la Fuente says. “It has high yields, deep domestic markets, and is relatively well-diversified. We also like Chile, despite its reliance on copper exports.

The government there has saved a lot of its copper windfall.”

Conversely, de la Fuente warns, Mexico and Columbia could be countries that warrant caution from global investors, given Mexico’s dependence on the U.S. and Columbia’s relatively shallow domestic financial markets.

Looking further out, “global investors will realize there is nothing wrong with the economic fundamentals in these countries,” Coutino says. “They will go back eventually to emerging markets, especially in Latin America.”

“There will be a time, when the dust settles, when it could be good to get back into these markets,” Wardle says.

“I don’t see any reason that should change.” Advice for traders interested in dipping their toes into the Latin currency arena?

“[Keep your eye] on what is happening in the big markets global equities and global rates,” Estebanez says.