- Reflation and rising commodity prices make the bull case for Latin America
- Political risk is significant with fiercely contested elections
Emerging markets seemingly offer a textbook reflation trade and cheaply rated Latin America in many ways has compelling prospects. Economies in the region, which is rich in natural resources, will surely benefit if commodities truly are on the up leg of a supercycle.
Furthermore, as the value stocks in developed markets that have done well since the turn of the year rerate upwards, investors will look farther afield for bargains. In a risk-on environment, countries that are extremely cheap could be a real opportunity.