Equity investors have little to smile about these days. From the S&P 500 in the US to the Hang Seng in Hong Kong, global stock indices have been bruised and battered. But amid the sell-offs, one region has bucked the trend.
Latin America has emerged as one of the few winners from the turmoil. The MSCI Latin American Index is up 13 per cent in 2022. Within this, bourses in Brazil, Chile, Peru and Colombia have gained between 19 to 30 per cent in dollar terms. By contrast, the broader MSCI All-World index has fallen more than 12 per cent.
Investors are parking their cash in Latin America for two main reasons. Surging commodity prices is the obvious one. Brazil is one of the world’s largest producers of soyabeans, crude oil and iron ore. Chile leads the way in copper. Argentina is a big wheat grower. All benefit from Western sanctions on Russia and disruption to Ukraine’s agriculture.