I just came back from speaking on a panel, on Brazil and Latin America more broadly, at a conference for institutional investors. We five panelists came from research, investing, and on-the-ground business backgrounds, providing a variety of perspectives and interesting conversation. Overall three big themes emerged in our discussion:
Brazil still holds the top spot in investor thinking, with the majority of our time focused on its prospects. But though most were positive on the country, they were less so on the investment opportunities. The main challenge is that so many portfolio, pension, and private equity investors – both foreign and domestic – have poured into Brazil’s markets that bargains are few. Instead, those actively investing are looking to Mexico, Colombia, and Peru –markets with good fundamentals but less competition. Some saw potential in the “smaller cap” space (U.S. $25-50 million investments), but these more “under the radar” discoveries require deep personal (and often political) ties on the ground. What all see are well-known international companies and brands (particularly in the tech space) scouting out Brazil, considering direct investments and/or locating facilities there to spread their global base and gain access to the growing local market.
A second theme was Latin America’s rising consumers, a group that has grown by at least 70 million in less than a decade. Whether in Brazil, Mexico, Peru, Colombia, Chile, Argentina, or elsewhere, this phenomenon is seen as a big strength not just for future growth but also vis-à-vis other emerging economies such as China.
Finally, there was more optimism about the United States than I had heard in a while. The general feeling was that the economy has turned a corner and, though perhaps slow, it is moving forward. For the long term most were quite bullish, in part due to the perceived ability of U.S. corporations to grow and innovate abroad (in places such as Brazil and its neighbors), bringing benefits both here and there.