Latin America vs. Asia

An article from the Houston Chronicle noting improvements in Latin America also shows us why I would invest in Asia instead.

First growth of 4%/year doesn’t compare favorably to countries like China, India, and Thailand. It is similar to what we may expect to see in Korea, with Korea being more stable:

But the report also points to lingering vulnerabilities in public institutions and high government debt levels in the region, which has been prone to crippling financial crises that make governments in the region more dependent on loans from the IMF.

One Response to “Latin America vs. Asia”

  1. Jered says:

    Over any five year timespan in the last two decades, Latin American stocks outperformed Asian peers. It’s a strange phenomenon and not one that I uncovered, but one that I read about from a researcher. Why would this be? Apparently, it has to do with the fact that although Latin American countries and law systems seem much more hostile to “capitalism” than in Asia, the opposite is actually the case. Latin American companies are consistently more profitable than their Asian counterparts and so while they don’t expand at the rate that you’ll find in Asia (and as a result employ less capital), for the capital that is employed, a higher rate of return is obtained.

    That said, investing in any emerging market is best left to the specialists and professionals.