Why Latin American stocks are attractive right now
Low valuations and soaring commodity prices have boosted Latin American stocks this year. Alex Rankine looks at why the region is lucrative right now.

Latin America is proving “a darling destination for investors in 2022”, say Anisha Sircar and Rodrigo Campos for Reuters. Low valuations and soaring commodity prices have given the region’s stocks a boost. Currencies in Brazil, Colombia, Peru and Chile are the “four best-performing across emerging markets against the dollar” so far this year.
Stronger local currencies help flatter gains for foreign investors. The MSCI Emerging Markets Latin America (LatAm) index has gained 25% in dollar terms year-to-date, even as the broader MSCI Emerging Markets (EM) index has dropped 8%.
That spurt of outperformance is welcome after a long spell of disappointment. In the three years up to 14 March, the MSCI Latin America index fell 4.7%, compared with a 9.8% gain for the MSCI Emerging & Frontier Markets index, says Kathleen Gallagher for Investment Week.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Brazil, the region’s biggest economy, fell into a severe recession in the middle of the 2010s. It was barely recovering before Covid-19 struck.
Yet with commodity prices rising, prospects are now looking up. Data from the Institute of International Finance shows that “on average, 72% of total exports in the largest Latin American countries were linked to commodities last year”.
With Russian supplies disrupted, the world is especially desperate for Brazilian crops, Colombian oil and Chilean copper. The region’s markets are closely correlated with commodity price movements; the last big boom coincided with the great commodity supercycle of the early 2000s.
Brazil is back in fashion
Brazil plays an outsize role in the landscape, since its stocks account for 62% of the MSCI LatAm. The local Ibovespa index has gained 15% so far this year. “High yields” and “cheap stocks” are drawing in investors, says Vinicius Andrade on Bloomberg, with $14bn of net inflows by foreign investors since mid-December. “Even after the recent rebound, the Ibovespa is trading at
7.7 times forward earnings, below its ten-year average of 11.7 times.
Not everything is rosy, says The Economist. Generous pandemic fiscal help and the “worst drought in 90 years” have combined to drive Brazilian inflation up to 10.5%. Incumbent president Jair Bolsonaro is a “fiscal chameleon” and is splurging public money in a bid to boost his flagging support.
That plan isn’t working. Polls suggest that Bolsonaro is on course to lose to former president Luiz Inácio Lula da Silva in elections this autumn. Leftwing Lula’s victory in 2002 “spooked the markets, but he was reasonably responsible in his spending in his first term, at least”. The rally shows investors are confident that Lula will “govern moderately” should he triumph again.
Sign up for MoneyWeek's newsletters
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
Alex is an investment writer who has been contributing to MoneyWeek since 2015. He has been the magazine’s markets editor since 2019.
Alex has a passion for demystifying the often arcane world of finance for a general readership. While financial media tends to focus compulsively on the latest trend, the best opportunities can lie forgotten elsewhere.
He is especially interested in European equities – where his fluent French helps him to cover the continent’s largest bourse – and emerging markets, where his experience living in Beijing, and conversational Chinese, prove useful.
Hailing from Leeds, he studied Philosophy, Politics and Economics at the University of Oxford. He also holds a Master of Public Health from the University of Manchester.
-
‘I installed a heat pump in my home – here are five things I’ve learnt’
From the size and noise of a heat pump to how much it costs to run one, Ruth Emery reveals what she’s learnt after installing one in her home six months ago
-
3 ways to work out if a stock is good value
The only thing you can really control in investing is the price you pay for an asset – but how can you tell if you’re getting a good deal when it comes to the price of a stock?
-
'Technology will determine tomorrow’s top stocks in emerging markets'
Opinion John Citron, investment manager of the JPMorgan Emerging Markets Investment Trust, tells us where he’d put his money
-
Two ways to tap into monopoly profits from airports
Most investors can’t get their hands on airports. Here are two ways you can
-
Fat profits: should you invest in weight-loss drugs?
The latest weight-loss treatments could transform public health and the world economy. Should you invest?
-
How investors could profit from Ramsden Holdings' four-part growth strategy
Ramsdens Holdings offers a diversified set of financial and retail services and a juicy yield, says Dr Michael Tubbs
-
How to invest in the booming insurance market
The insurance sector is experiencing rapid growth after years of stagnation. Smart investors should buy in now, says Rupert Hargreaves
-
Out of America's shadow: Why Trump's tariff chaos may be good for non-US stocks
Opinion Upending global investment and trade could benefit other countries at the expense of the US market, says Cris Sholto Heaton
-
BP's 'long, painful decline' – and why next year could be even tougher
Opinion Long-suffering shareholders in oil giant BP have been pushing for change. It won’t come soon enough, says Matthew Lynn
-
Investment trusts tap the profits in exotic and obscure global markets
Opinion Peter Walls, manager of the Unicorn Mastertrust fund, highlights three investment trusts as he shares where he'd put his money