The Latin American Stocks

In a well-diversified international stock portfolio, I would confidently invest up to 3% of my holdings in the S&P Latin American 40 list of large-cap securities. The considerable political, economic, currency and market risks of Mexico, Brazil, Chile, Argentina and neighbors, however, combine to hold me from holding a bigger percent.

There are 100 Latin American companies listed on the NYSE, including 32 from Brazil, 24 from Mexico, 19 from Chile and 10 from Argentina. The total 470 NYSE-listed non-U.S. companies are valued at $4.6 trillion, but the 100 Latin American stocks are valued at about $60 billion.

Of the S&P Latin American 40, which is a part of the S&P Global 1200 index, there are 18 from Brazil, 11 from Mexico, 8 from Chile and 3 from Argentina.

Tele Norte (NYSE: TNE) in telecom, Petrobras (NYSE: PBR) in energy, and Companhia Siderurgica (NYSE: SID), Gerdau (NYSE: GGB) and CVRD (NYSE: RIO) of the materials sector. All these had a great run during 2003 and for the last 7 or 8 months of 2004, but most started to come off late in the year as the USD gained strength.

From Mexico, there is: Telefonos de Mexico (MX:TELMEXL) in telecom, Alfa SA (MX:ALFAA) in the industrials, and Wal-Mart de Mexico (MX: WALMEXV) of the consumer staples sector. These particular stocks have fared well recently.

The three highest S&P-rated Latin American funds (all are 5-star rated), when last I looked about a year ago, are:

(1) Genesis Condor Fund, (1-year/3-year average returns = 97.3%/59.0%), Genesis, 21 Knightsbridge, -, London, United Kingdom, SW1X 7LY Tel : 44-20-7201-7200 Fax : 44-20-7201-7400

(2) Gartmore CSF Latin America, (1-year/3-year average returns = 91.4%/34.4%), Gartmore, 8 Fenchurch Place, Gartmore House, London, England, EC3M 4PB Tel : 44 (0)20 7782 2000 Fax : 44 (0)20 7782 2075

(3) Threadneedle Latin Amer Growth 1, (1-year/3-year average returns = 81.9%/26.4%), Threadneedle Investments, PO Box 1331, Swindon, England, SN38 7TA Tel : 0800-068-3000 Fax : 0800-068-4001

I intend to write in detail on Brazilian stocks this year, and have been modelling the Bovespa to in-depth economic data series, which may prove a help.

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