Latin America: Judging it on merits
The lemming effect whereby all emerging markets are sold off because of bad news in a few may be slowly breaking down. While Latin America has experienced fallout from the Asian crisis, a survey of US portfolio investors shows their stance towards it quickly recovering to a more positive one. This is largely because of the region's strong fundamentals and adept handling of volatitilty.
"This survey shows the verdict is still out as to whether the Asian crisis has hit rock bottom and that financial investors are understandably less confident about emerging markets than a year ago," says Christopher Smith, co-head of emering markets sales and trading with BankBoston, which commissioned the survey. "But it also a shows a high regard for Latin America's ability to ride out the storm as financial investors focus on long-term fundamentals."
Such positive feelings by US investors are unusual. "Clearly US portfolio investors do not view it as a safe haven, with the possible exception of Mexico, but many believe it is worth the risk and essentially moving in the right direction," says Smith.
A total of 66% of investors surveyed said they were more confident in Latin America as a region for investment than five years ago.