With their lower unemployment, increasing consumption and higher growth rates, Latin American nations are attracting investors looking for a refuge from the global financial turmoil, analysts say.
At the same time, they cautioned at a three-day conference that wrapped up on Friday in Madrid, the region is not an “immune oasis” from the troubles affecting the world economy.
“Latin America has a promising future, although growth is not as fast as it has been in recent years,” said Alice Gutierrez, an analyst at Colombian investment group Inversiones Suramericana at the Foro Latibex.
The region is “undeniably attractive for those looking to diversify their geographic risk from the United states and Europe,” she said at the event, which gathered representatives from 50 major Spanish and Latin American firms.
The IMF predicts Latin America will grow 4 percent next year, compared with just 1.8 percent in the US and 1.1 percent in the struggling eurozone.
Among the region’s strong points is “the health of its public accounts and a financial sector that is well capitalized and has a clean balance sheet,” said Alejandro Varela, a fund manager at Spanish brokerage Renta4.
“The health of the financial system is key since the [European] sovereign debt crisis is having a special impact on the financial system at the global level,” he added.
Another factor giving Latin America a boost is drop in unemployment across the region, said Luiz Carlos Angelotti, executive director at Brazil’s second-largest private bank, Bradesco.
“This creation of jobs stimulates internal demand, which is the real motor to maintain growth in our country despite the negative effects of what is going on in the global economy,” he said.
Brazil’s unemployment rate stood at 6.22 percent in September, the lowest in its history.
Mexico’s jobless rate stood at 5.4 percent last year, compared with 9.6 percent in the US and 9.9 percent in the EU, said Frank Aguado Martinez, financial director at Mexican group Inbursa.
“Those nations which normally behave badly are now the well behaved nations,” he said, in a reference to Latin America’s past struggles with soaring inflation, sky-high joblessness and out of control debt.
Spanish firms have sought to take advantage of Spain’s cultural and linguistic links to its former colonies in Latin America to profit from the rosier economic conditions in the region.
Spain’s two largest banks, Santander and BVA, and telecoms giants Telefonica earn about 75 percent of their revenues outside of Spain, mostly in Latin America, according to IG Markets analyst Daniel Pingarron.
“In a way we have shown that we are more resistant but no nation in Latin America is an immune oasis,” Santander Asset Management senior Latin American equity fund manager Consuelo Blanco said. “Investing in Latin America will always involve risks, that is why we are an emerging market.”
Too much investor interest in the region can also be a problem, Gutierrez said.
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
MAJOR DROP: CEO Tim Cook, who is visiting Hanoi, pledged the firm was committed to Vietnam after its smartphone shipments declined 9.6% annually in the first quarter Apple Inc yesterday said it would increase spending on suppliers in Vietnam, a key production hub, as CEO Tim Cook arrived in the country for a two-day visit. The iPhone maker announced the news in a statement on its Web site, but gave no details of how much it would spend or where the money would go. Cook is expected to meet programmers, content creators and students during his visit, online newspaper VnExpress reported. The visit comes as US President Joe Biden’s administration seeks to ramp up Vietnam’s role in the global tech supply chain to reduce the US’ dependence on China. Images on
New apartments in Taiwan’s major cities are getting smaller, while old apartments are increasingly occupied by older people, many of whom live alone, government data showed. The phenomenon has to do with sharpening unaffordable property prices and an aging population, property brokers said. Apartments with one bedroom that are two years old or older have gained a noticeable presence in the nation’s six special municipalities as well as Hsinchu county and city in the past five years, Evertrust Rehouse Co (永慶房產集團) found, citing data from the government’s real-price transaction platform. In Taipei, apartments with one bedroom accounted for 19 percent of deals last
US CONSCULTANT: The US Department of Commerce’s Ursula Burns is a rarely seen US government consultant to be put forward to sit on the board, nominated as an independent director Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday nominated 10 candidates for its new board of directors, including Ursula Burns from the US Department of Commerce. It is rare that TSMC has nominated a US government consultant to sit on its board. Burns was nominated as one of seven independent directors. She is vice chair of the department’s Advisory Council on Supply Chain Competitiveness. Burns is to stand for election at TSMC’s annual shareholders’ meeting on June 4 along with the rest of the candidates. TSMC chairman Mark Liu (劉德音) was not on the list after in December last