Investing In Latin America

The following is an excerpt from 7 Top Latin American Stocks to Buy, originally published on Kiplinger’s.

Brazilians have a tongue-in-cheek saying about their country. Brazil is the country of the future… and it always will be.

That’s probably a little unfair. Brazil and Latin America in general have grown and modernized to the point that their economies are barely recognizable to those who remember the commodity-driven economies of decades past. Latin America is highly urbanized and has a vibrant and growing middle class.

All the same, the region still has a long way to go to meet developed world standards. For example, per capita income in the United States, Germany and France is $59,495, $50,206 and $43,550, respectively, according to recent estimates by the International Monetary Fund. In contract, Chile – the wealthiest country in Latin America – has per capita income of just $24,558, slightly below Turkey and slightly above Croatia. Argentina and Mexico weigh in at about $20,000 each.

Rome wasn’t built in a day, and it will be a long time until these countries approach developed-world living standards. All need major investments in education and infrastructure to make that happen, and these take time.

In the meantime, intrepid investors looking to get a piece of that growth have abundant options at their disposal. Latin America is home to dozens of world-class companies that stand to benefit from the continued growth in the region. Today’s we’re going to look at seven solid Latin American stocks that you can hold for the long-term. The list is more heavily weighted to Brazil and Mexico, as these countries have the deepest capital markets and the broadest selection of liquid public companies. But up and coming growth darlings like Colombia and Peru are included as well.

Creditcorp (BAP)

Apart from Colombia, Latin America’s brightest star of the past 20 years has been Peru. Like Colombia, Peru has its share of domestic unrest. In the 1980s, Peru was essentially a failed state. But in the years that have passed, the country has managed to restore law and order and has adopted solid growth policies.

The problem with investing in Peru is its lack of large, liquid stocks. The handful of Peruvian stocks with healthy trading volume tend to be clustered in the metals and mining sector.

There is, however, one large-cap Peruvian stock that gives broad-based exposure to the growing Peruvian economy: Creditcorp (BAP), a banking group with an $18 billion market cap.

The group’s Banco de Credito de Peru is the country’s largest retail bank and the natural choice for many middle class and wealthy Peruvians. But the group is also active in tapping the needs of working-class Peruvians via microfinance leader Mibanco and has vast insurance and wealth management wings as well. You can think of Creditcorp as a one-stop shop for Peruvian finance.

As we were reminded in 2008, finance can be a volatile sector. But Creditcorp has managed to survive and thrive through booms and busts and everything in between. If you believe in the long-term Peruvian growth story, Creditcorp is your best option.

To continue reading, please see 7 Top Latin American Stocks to Buy.

Disclosures: No current position in any stock mentioned.

 

Disclaimer: This material is provided for informational purposes only, as of the date hereof, and is subject to change without notice. This material may not be suitable for all investors and is not intended to be an offer, or the solicitation of any offer, to buy or sell any securities nor is it intended to be investment advice. You should speak to a financial advisor before attempting to implement any of the strategies discussed in this material. There is risk in any investment in traded securities, and all investment strategies discussed in this material have the possibility of loss. Past performance is no guarantee of future results. The author of the material or a related party will often have an interest in the securities discussed. Please see Full Disclaimer for a full disclaimer.