Last year, Latin America was home of some of the best performing stock markets in the world. Peru, Chile and Colombia were the number two, three and four best-performing MSCI emerging market country indexes in 2010, driven primarily by the strength in commodity markets. In fact, something I’ve talked about recently is the “New Silk Road,” which is an expression that has been used to describe the growing commercial interaction between the emerging markets of Asia, the Middle East, Africa and Latin America. This new, 21st-century version of the Silk Road effectively connects China and its voracious demand for commodities with commodity-producing countries.
But Latin America is so much bigger than just commodities. In Latin America, we have positive demographics, relative political stability and pro-business policies — save for Venezuela and Bolivia — as well as the development of consumer economies as prosperity trickles down to the masses.
Let’s take a look at five Latin America investments that are offering some very interesting opportunities:
#1 – AFP Provida
Chile is the most advanced market in Latin America with a GDP per capita of $11,600. The country has been benefiting from years of conservative budgetary policies that aim to save surpluses in a stabilization fund for a rainy day (like 2009), which contributes greatly to macroeconomic stability. And you better believe there are plenty of ways to play the boom here.
The first is AFP Provida (NYSE: PVD), a pension fund administrator that is expanding in new financial services and regional markets. The company has a highly stable fee business, which allows it to pay a 7% dividend with a valuation of nine times earnings. As plan assets grow, the company fee income grows. Rapidly developing Latin American economies allow for bigger pension contributions over time, which is a long-term positive for AFP. (more)
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