From CNBC · Michelle Caruso-Cabrera · · 2m
Latin America's investing moment is now
A weak dollar, strong commodities, and pro-business leaders are creating the best conditions for Latin American growth in decades.
In brief
A weak dollar, strong commodities, and pro-business leaders are creating the best conditions for Latin American growth in decades. Latin America is experiencing its strongest investment tailwinds in decades, but countries must act now to capitalize on favorable conditions before they shift. Originally reported by CNBC.
Latin America beats the S&P 500
The iShares Latin America 40 ETF is up 15% year to date versus the S&P 500's 11%, and has surged more than 70% since late 2024.
The tailwinds are the best in decades
A weak dollar, strong commodities, favorable geopolitics, and pro-business leaders elected across the region are driving growth. The weak dollar is the most important factor.
“Latin America is poised for take-off. The conditions for Latin America to achieve a higher rate of growth are the best they have been in decades.”
Why a weak dollar matters
A weaker dollar means investors seek stronger currencies and better returns, debt repayment becomes cheaper for countries borrowing in dollars, and commodity prices rise.
Real rates attract global capital
Latin America has some of the world's highest real interest rates, with carry levels reaching 10% in Brazil. This attracts fixed income and foreign exchange inflows while leaving room for rate cuts to help stocks.
Country-specific opportunities emerging
Mexico benefits from the AI boom through CPU assembly exports. Argentina is undergoing the most market-friendly shift in a generation. Capital is flowing back to Colombia, Peru, Ecuador, and Argentina.
U.S. strengthens Western Hemisphere ties
Secretary of State Marco Rubio visited Colombia, Ecuador, and Peru this month, reflecting the White House's focus on renewing ties with the region and a renewed Monroe Doctrine approach.
Rising U.S. rates pose biggest risk
Higher U.S. interest rates would severely hurt Latin America's growth prospects. El Nino-driven droughts and floods also threaten agriculture in Colombia and Peru.
“If the US sneezes interest rate wise, that's full-on pneumonia for Latin America.”
Brazil ETF offers liquid entry point
The iShares MSCI Brazil ETF has 8.6 billion dollars in assets and is up 18% this year. It offers exposure to mining, oil, and financials including the digital bank Nu Holdings.
Brazil's election could shift markets
Brazil's presidential election is in weeks. Polling now shows business-friendly candidate Flavio Bolsonaro competitive with incumbent Lula da Silva. The first round is October 4 with a runoff on October 25.
In short
Latin America is experiencing its strongest investment tailwinds in decades, but countries must act now to capitalize on favorable conditions before they shift.
