When investors choose Mexico as a safe haven, it's clear the world has changed profoundly. The collapse in Asian markets and the robustness (so far) of Latin America have sent economists into a huddle. With policy regimes as different as Chile and Argentina proving successful, drawing firm conclusions will be tough. Eventually fully-formed economic theories may emerge.
Fundamentals
Right now a few things are obvious: a strong banking system is the backbone of development, democracy works better than dictatorship over the long term and capital controls are back in favour. But nothing can take the place of strong fundamentals. It is these more than anything that have saved Latin America and led analysts to heap praises on Mexico and to a lesser extent Brazil.
| Net money flows in (+) and out (-) of equities (All flows are net in $ million ) |
||
| Money flow week ending January 29 | Money flow week ending February 5 | |
| Argentina | ||
| Major ADRs |
12.8 |
33.8 |
| Underlying local shares |
16.3 |
5.2 |
| Remainder of local shares |
-4.9 | |