Several countries within Latin America have emerged as favourable investment destinations, backed by broad-based and positive macroeconomic themes, says Sura Asset Management.
Speaking in Sydney yesterday, Sura Asset Management head of product development Felipe Trujillo said the Pacific Alliance – Mexico, Colombia, Peru and Chile – offers investors a variety of opportunities.
“You have different flavours in terms of the investment themes that you can bring to investors,” he said.
According to Mr Trujillo, Pacific Alliance nations are set to benefit from an emerging middle class and young demographics – the average age is 29 years.
Mixed with public and private infrastructure spending, Mr Trujillo added, the economic environment of these nations has turned positive.
Sura AM regional head of utilities, Felipe Asenjo Wilkins, noted that sectors such as consumer staples will benefit from the region’s fast-growing middle class.
He said opportunities also exist in healthcare and banking – where the firm is overweight the benchmark by 4 per cent and 15 per cent respectively.
In addition, Mr Asenjo Wilkins pointed out that when investing in Latin America, corporate governance is a key consideration.
“Corporate governance is the most important thing that we see because at the end, if corporate governance fails, social and environmental [factors] will also fail,” he said.
Mr Trujillo added, however, that investors are currently mistaken when it comes to investing in Latin American.
“Global investors have been using one country to proxy the whole continent," he said.
By using one nation, such as Brazil, as a proxy and disregarding the Pacific Alliance, investors are missing out on 50 per cent of Latin American GDP.
Further, if things soar within that one nation, investors will suffer under the lack of diversification.