Managers should increase allocation in Latin America, says survey

Research with international investors during Santander’s Annual Research Conference on Latin America, held this year for the first time in New York, in the United States, shows that more than half of managers, or 57% of the total, intend to increase their exposure to the region over the next 6 months, considering moderate or significant increases in the period. 40% do not estimate changes.

The study showed that the majority of respondents manage emerging market portfolios (49%), followed by Latin American (23%) and global (20%) portfolios. 77% of managers have exposure overweightor above average, to Latin America, while only 6% are underweightor below average.

“These results reinforce our perception that foreigners have an optimistic view of Latin American markets and, even maintaining a current OW position, have room to increase their allocation”highlights the report.

According to Santander, managers expect the main catalyst to be the Fed’s interest rate policy (Federal Reserve), the Central Bank of the United States.

“Additionally, consistent with what we have previously observed in client conversations, the survey results share the optimistic sentiment we found when we asked about the MSCI LatAm USD upside expectation for 2024”states Santander, indicating that more than 90% of those interviewed believe that the index will appreciate.

POSITIVE OUTLOOK

Santander’s LatAm Conference was held last week, highlighting the panelists’ favorable outlook on infrastructure, energy and growth in Latin America. Brazil appears as the best option among Latin American markets, considering the expected performance of stocks and currencies, with Mexico next.

Santander mentioned as main arguments in favor of investment in the region the global geopolitical crises, the possibilities offered by nearshoring e “friendshoring”; favorable demographics with a young population, easing of monetary policy and potential long-term gains in investments in sectors such as infrastructure and energy, in addition to historically pragmatic leadership, regardless of political orientation.

However, the possible listing of assets on American stock exchanges and not on their markets was among the reasons for concern among investors. Of the companies covered by the bank, the positive highlights in Brazil were Rumo, Hidrovias do Brasil, Santos Brasil, Klabin, Prio, Sendas Distribuidora (Assaí) and Smartfit.

With information from the Investing Brasil news agency.