Asset Class Strategy: Relative Value Takes Centre Stage
Significant volatility in emerging market (EM) assets means that relative value plays within EM are an increasing focus for us, exemplified by our bullish view on Mexico's IPC equity index over Chile's IPSA.
Increasingly fierce competition for capital within Latin America in the coming quarters will favour those countries with investor-friendly policies, such as Mexico, Colombia, Chile and Peru, while Brazil will remain at risk of losing its status as a major regional investment destination.
With our major macroeconomic views for Latin America largely unchanged, we continue to prefer assets more closely tied to a recovering US economy over a multi-quarter to those with high exposure to slowing Chinese growth and lower industrial metals prices over a multi-month time horizon.
|Stronger Fundamentals To See IPC To Outperform|
|Ratio Of Mexico's IPC Equity Index Over Chile's IPSA|