How to Invest In The Most Promising South American Companies?

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View of Sao Paulo. Brazi,

South America is an emerging market region that is outperforming other global areas that continue to have a rough time in 2022. There are two major players in the Latin American market, Brazil and Mexico, making up 50% of the continent’s GDP. Still, one cannot discount other countries like Chile, Colombia, and Peru.

Latin America’s economic success this year is due to two reasons – it is still a relatively cheap market with a younger workforce. It produces plenty of commodities whose prices have soared. Another factor that significantly influences current regional investments is that it does not feel the effects of the Russia/Ukraine conflict as much as other regions, except for the increased commodity prices.

Cautions for Investing in South America

Higher commodity prices often mean mixed blessings. Firstly, the producers benefit from them. But, on the other hand, increases, especially in the oil price, mean higher inflation, which can hurt investments, especially on a continent known for its unpredictable inflation.

Another phenomenon with emerging market economies is that they often resort to increasing tax rates, reducing the profits for investors.

However, these cautions don’t diminish the appeal of a cheaper market that remains somewhat shielded from the current geopolitical risks, especially now that investors have turned away from Russia. Moreover, South American economies feature a balance between human and natural resources with general political stability that could offer long-term investment opportunities.

Promising South American Companies

Agricultural and financial services make the most considerable contributions to the region’s economy, and technology is driving the transformation of these sectors. Furthermore, other areas with tremendous growth potential include health, logistics, e-Commerce, and mobility.

Despite some regional political turmoil like that in Chile and Argentina’s current economic crisis, global investment funds offer liquidity to the region. One example is the $5 billion poured into the area by Japan’s Softbank, an investment conglomerate with plans to invest another $3 billion.

Here are the most promising South American companies whose stocks you could consider investing in:

Cemex

Headquartered in San Pedro, Mexico, Cemex supplies a market experiencing a housing boom. Despite a considerable decline in the company’s stock this year, the company’s revenue results increased by 11% in 2021.

Coca-Cola Femsa

Another Mexican company to consider is Coca-Cola Femsa, the famous soda maker. Mexicans drink an average of 700 glasses of the popular beverage annually, double that of the average American. The company sales fell by 5% in 2020, but 2021 saw firm revenue growth, making this a popular stock.

Credicorp Peru

Credicorp is the primary financial holding company in Peru, a country that had a 13% growth last year, beating the estimates. The county’s growth is expected to continue at a smaller pace, but estimates place it at about 3.5%, not bad for the current climate. Moreover, with an increase of 24% earlier this year YTD, the share is the best performing one in the region.

MercadoLibre

Based in Buenos Aires, Argentina, this online marketplace company focuses on eCommerce and online auctions. MecadoLibre’s business increased by 73% in 2020 and 78% in 2021, thanks to the enormous market in the region of 300 million digital buyers.

Petrobras Brazil

Petróleo Brasileiro is a Rio de Janeiro, Brazil-based petroleum company commonly known as Petrobras and a popular share on the list of most South American investors. The stock increased by 33%, placing it on the list of the top performers this year. Fossil fuels are popular doe now, making this a worthwhile share.

PagSeguro Digital

PagSeguro provides financial services and digital payments and is headquartered in Sao Paolo, Brazil. The company provides payment processing software used by e-commerce websites and mobile applications in the area’s 300 million digital buyers market, meaning the share has long-term potential.

Unfortunately, the share price has dropped considerably since its initial public offering, making this a share for those looking for future potential over the long term.

Grupo Televisa Mexico

The Mexican media company has its base in Mexico City. It includes a broad catalog of popular programs (including news, series, movies, and live sports) across the Spanish-speaking people of  Latin American and immigrant communities in the U.S. Besides cable and satellite, the company has other revenues from radio, publishing, and several other businesses.

Final Take

Deciding to invest in the South American market is easier for most investors interested in the Brics market now that Russia is out of the equation. In addition, the area has experienced a boom in tech companies worth considering. However, if you aren’t interested in buying individual company shares, look for reputable investment trusts with selected asset picks that can give you a good return.

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