You dont own enough LatAm

marketscreener.com · Feb 26, 2026 · Collected from GDELT

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MSCI LatAm delivered +56% in 2025 vs. 16.3% for the S&P 500. The AI-driven tech rotation into real assets has collided with three structural drivers in LatAm for a decade-long bull run. And you're barely exposed to it. Brazil’s stock market index Bovespa just hit an all time high, up nearly 20% since this year itself. Milei brought Argentina’s inflation to its lowest level in the last 8 years. Chile elected its most pro-business leader since its return to democracy.These are just a few of the examples showing the revival of the Latin American economy, yet the average global portfolio only has 0.82% exposure to this next phase of decade-long growth.In the SaaSpocalypse era where everyone is scrambling to get their hands on real assets, Latin America boasts of the most natural resources of almost any other region on earth: 40% of the world’s copper, 56% of lithium, 55% of global silver output and producing record volumes of crude oil. Yet, the MSCI All Countries World Index is exposed by only 0.82% to the Latin American economies. Smart money is waking up to this dramatic misallocation and deciding to invest in LatAm, why aren’t you?In this edition of Impactfull Weekly, we lay out why LatAm equities are the most asymmetric risk/reward opportunity in global public markets today: the rotation away from tech already ongoing, the five tailwinds driving this rally, where to invest (and where to avoid), and the companies positioned to capture the move.Part 1: The HALO effectThe S&P 500 returned +16.3% in 2025. And the MSCI EM LatAm index returned +56% in the same timeframe. In January 2026 alone, international equity ETFs attracted $52.1 billion versus just $21.1 billion into US equity ETFs. But we’re not here to talk about the US Equities slowing down, we’re here to tell you where the market’s eyes have moved. After the dollar weakened against other major currencies, investors piled into gold, which in turn took the entire commodity metals market higher: copper, platinum, silver. On top of that, AI spending has shifted the bottleneck to physical infrastructure: if we do not have enough copper, platinum, or stable energy sources coming out of the ground, we cannot use the high-end AI chips that need them.And with Anthropic releasing products that are making legacy software players extinct (as we covered in our previous edition), code stopped being the bottleneck to growth. Real assets took its place: gold, silver, copper, platinum, oil and natural gas.Where else can you find deeply discounted, pro-business economies sitting on the world's largest pile of critical resources, all while backed by US strategic interests? The answer is Latin America.The mechanism underneath is one we have seen before. When the dollar weakens, commodity prices rise. Commodity exporters see their revenue figures go up, their currencies appreciate, and their equity markets re-rate in dollar terms. Between 2000 and 2010, the S&P 500 delivered -0.95% annualised while the MSCI Emerging Markets index compounded at +9.8% per year. For historical context, Brazil's Ibovespa rose 1,871% in dollar terms between 2002 and 2008. Over the next decade, Goldman Sachs forecasts emerging markets equities will return 12.8% annualised (counting USD depreciation) over the next decade versus 6.5% for the S&P 500.Part 2: Winds of growth are blowing over LatAm(Puerto Rican artist Bad Bunny at the Super Bowl Halftime Show on the 9th Feb, highlighting Latin American culture)Commodity supercycle is real, and LatAm sits at the center of itTo understand why Latin American equities are uniquely positioned for the next decade, you have to look at the structural reality of the global materials market. A decade of severe underinvestment in capital expenditures (CapEx) combined with the insatiable, metal-heavy demands of the global energy transition has ignited a true commodity supercycle.The world desperately needs copper, lithium, iron ore, and precious metals. Latin America effectively holds the keys to the world's vault. Chile and Peru dominate global copper production, the "Lithium Triangle" (Argentina, Bolivia, Chile) holds over half of the world's lithium reserves, and Brazil remains an iron ore and broad-metals powerhouse.When you invest in LatAm indices, you are buying massive exposure to the mining and materials sector, alongside the local banks that fund them. When commodity prices surge, mining companies experience a massive increase in their operating leverage.What does this mean? As the extraction costs of these metals remain “relatively” fixed, every dollar increase in the price of copper, iron, or platinum flows directly to the bottom line of these miners.For example, if you look at the historical correlation between Brazilian stocks (EWZ) and platinum prices, they moved in sync for over two decades.However, as the real asset rally has violently accelerated, sending platinum and other hard metals’ prices vertical, LatAm equities have temporarily lagged. This gives us a rare opportunity to latch on to this rally, extremely early.Tale of two Latin AmericasFor the last decade, Latin American markets have carried a heavy 'political risk premium' that made it difficult to attract international investment. This was driven by the 'Pink Tide', a wave of left-wing, populist governments that prioritised state intervention, heavy taxation, and anti-market rhetoric. But when economic reality hits you in the face after you’ve run out of other peoples’ money, populism will eventually go out of fashion. In this backdrop, the region is undergoing a structural, pro-business reversal.This reversal is most visible if we see the rightward turn of Latin American countries from 2015 to today.(take a closer look at the chart here)If we see this chart and map it to today’s economic and political reality, it seems that the countries that are making large-scale reforms to attract foreign investment, tackle inflation, use their natural resources for the betterment of their people, countries like Argentina, Chile & Peru are becoming largely more investable. Milei has brought inflation to under 30% in 2026, Chile & Peru have declared they’re partnering up to collectively produce 51% of the world’s copper within the next 15 years, and Brazil set a new record with $348 billion in exports in 2025 while also reforming its tax code to become more business friendly.Whereas, for countries that are more left leaning, like Mexico & Colombia, the opposite is playing out. In Mexico, a sweeping constitutional overhaul to elect all federal judges by popular vote has severely damaged business confidence and raised major red flags regarding the rule of law, making it a highly unpredictable environment for foreign capital. And in Colombia, the government has completely halted all new oil and gas exploration contracts, a fiercely anti-business move for a nation where oil historically accounts for over half of its total exports, which is actively driving major international energy companies to abandon their offshore projects altogether.Strangely enough, what we’re seeing is that countries in the top half of the chart are becoming more investable and have timed their reforms right to benefit from the macroeconomic momentum, and the bottom third are going against this tide.Washington seems to have noticed this opportunity and is making an effort to “secure” its backyard with its actions and Trump’s speeches. Venezuela for oil, Chile & Argentina for Lithium, the picture starts making sense.The US National Security Strategy released in December explicitly invoked the Monroe Doctrine for the first time since the Cold War, backed by the $20 billion IMF facility for Argentina, a $130 billion critical minerals framework with guaranteed lithium floor prices, and development finance lending cap raised from $60 billion to $205 billion. Twin deficits to twin surplusesTo understand why capital is aggressively rotating into Latin America right now, you have to look at the macroeconomic contrast between the Global North and the Global South. The developed world, led primarily by the United States, is currently drowning in 'twin deficits'. This means they are running massive fiscal deficits, with government spending far exceeding revenue, alongside deep current account deficits, importing far more than they export.Latin America is executing the exact opposite playbook. Because of the pro-business political changes and the booming commodity supercycle we just discussed, the investable top half of the region is structurally shifting towards 'twin surpluses'.Fiscal surplus: Now, paired with the pro-business political wave, governments are actively slashing state bloat. Argentina achieving back-to-back fiscal surpluses for the first time in over a decade whilst driving inflation down is the ultimate proof of concept.Current account surplus: As the global AI wave and electrification demands unprecedented amounts of copper, lithium and other commodities, and when agricultural exports hit record highs, such as Brazil's $348 billion milestone, massive amounts of foreign capital flow into the region.When a country runs a twin surplus, its currency stabilises, its sovereign debt risk compresses, and its equities become a magnet for international capital.And the byproduct of this twin surplus emergence in Latin America is that more exports lead to local currencies gaining in value against the dollar, which in turn supports international investment into their economies. Part 3: Our favourite themes to play the LatAm revival#1 Mining & Precious MetalsThese are your direct beneficiaries of the commodity supercycle and the global rotation into real assets.Compañía de Minas Buenaventura (BVL:BUENAVC1): Leading Peruvian precious metals mining company.#2 Utilities & EnergyAs these economies industrialise and nearshoring takes hold, energy demand spikes. These are highly regulated, cash-flowing machines.Companhia de Saneamento de Minas Ge