Significantly increased their investments in Latin America funds managed by investment companies such as Franklin Templeton, Fidelity Investments and T. Rowe Price. In particular, the Global Bond Fund, which has funds of $51 billion and is managed by Franklin Templeton, from October 2015 to March 2016 doubled their investments in the economies of Latin American countries (Brazil, Mexico and Colombia), Bloomberg cites data from research company Morningstar.
According to research by Morningstar, five funds, which spetsializiruyutsya on investments in emerging markets (T. Rowe Price EM Bond Fidelity New Markets Income, EM Debt Pictet, Pictet EM Local Currency and EM Stone Harbor Local Currency) over the last year has increased the volume of investments in Latin America. The growth rate of investment in Latin America has significantly exceeded the growth rate of investment in Eastern Europe.
According to the Manager, Fidelity Investments John Carlson, now in Latin America opened new opportunities for investment, and this is due to the “positive political developments” in the region. Carlson noted that investment flows are returning to emerging markets, is likely to go to Latin America rather than Eastern Europe. Commerzbank analysts, in turn, recommended to redirect investments from Central and Eastern Europe in the Brazilian’s debt in national currency.
“Right now Latin America is more interesting for investors than Eastern Europe” — said the head of the London-based research company Ashmore Jan Den. According to him, in the next half of the year, Latin America will show the biggest growth because earlier faced the deepest fall. According to the analyst, the changes associated with the transition from the “populist” regimes in Brazil, Argentina, and, in the future, in Venezuela.
In recent months in Brazil and Argentina, their posts left leaders, a policy which was designated by Western observers as lipopolysaccha. In November 2015 in Argentina’s presidential election win over a candidate from the ruling party “Front for victory” was won by the opposition candidate Mauricio Macri, and in mid-may the Brazilian Senate voted for the removal from power of President Dilma Rousseff. In Venezuela against the backdrop of severe economic crisis in the country, the opposition to prepare for the organization of a referendum on the resignation of the country’s leader Nicolas Maduro.
At the same time, in the major economies in Eastern Europe, the political changes, however, deterred investors. In particular, in Poland in November came to power, the party “Law and justice”, and then, in November 2016, the international rating Agency Standard & Poor’s lowered the country’s credit rating from A – to BBB+, citing the fact that the new authorities started the process of fundamental changes in the institutions of Poland”.
The yield on sovereign bonds of Latin American countries is much higher than that of the Eastern European States. In particular, according to Bloomberg, the yield on ten-year bonds of Brazil is four times higher than the yield on similar Polish bonds. The average yield on Latin American sovereign bonds is of 5.61%, while for middle Eastern, African and Eastern European countries, the rate is 4.58%.