Public Equities

Latin American Equities: More Than Meets the Eye

February 2023 – 6 min read

Despite the uncertain global macro backdrop, the combination of long-term structural trends and attractive current valuations is presenting a compelling opportunity in Latin American equities.

Latin America was one of the best performing markets globally in 2022. The region benefited from robust commodity export prices that were driven by global supply constraints, largely as a result of the war in Ukraine. This has stood in contrast to many developed and emerging countries which have suffered from inflationary pressures and fading growth.

“Latin American equities will continue to present unique long-term growth opportunities, which arguably remain unrecognized by many investors today.”

Looking ahead, while the outlook for the global economy is subject to near-term uncertainty and a potential recession in developed markets, we believe Latin American equities will continue to present unique long-term growth opportunities, which arguably remain unrecognized by many investors today. In particular, there are a number of supportive long-term trends benefiting the region—from the rise in nearshoring manufacturing, to the increasing importance of food security, to the urgency of the energy transition. In our view, companies that are directly or indirectly exposed to these sectors look poised for further growth.

1. Nearshoring

The practice of nearshoring—when companies invest in the production of finished goods closer to their home country to mitigate the challenges stemming from global sourcing—has accelerated rapidly post-COVID. As countries like the U.S. move to bring their supply chains closer to home, Mexico in particular stands out as a key beneficiary. In addition to its large and relatively young population of more than 120 million people,1 the country’s proximity to the world’s largest economy has cemented Mexico’s position as an emerging global manufacturing leader. This position is further reinforced by the numerous trade deals, including the United States–Mexico–Canada Agreement (USMCA), that Mexico has with over 50 countries.

As the nearshoring phenomenon continues to play out in the U.S., we believe Mexico will see significant investments which will stem from U.S. policies aiming to bring back production from Asia to North America. The recent supply disruptions globally have added fuel to this trend, with many companies moving from a ‘just-in-time’ to a ‘just-in-case’ mindset. Further underscoring Mexico’s attractive positioning, it takes less than five days to transport finished goods from a Mexican manufacturing base to the U.S., compared to five to six weeks on a container ship from Shanghai—and this can often be done at a considerable cost discount.

1. Source: United Nations Population Data. As of January 2022.

Want to read the full article?

View PDF
Headshot of Michael Simpson smiling at the camera.

Michael Simpson, CFA

Head of Latin American Equities

Forecasts in this document reflect Barings’ market views as of the preparation date and may change without notice. Projections are not guarantees of future performance. Investments involve risk, including potential loss of principal. The value of investments and any income may fluctuate and are not guaranteed by Barings or any other party. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. Examples, portfolio compositions, and investment results shown are for illustrative purposes only and do not predict future outcomes. Actual investments may differ significantly in size, composition, and risk. No assurance is given that any investment will be profitable or avoid losses. Currency exchange rate fluctuations may impact investment value. Prospective investors should consult the offering documents for detailed information and specific risk factors related to any Fund/Strategy mentioned.

Barings is the brand name for the worldwide asset management and associated businesses of Barings LLC and its global affiliates. Barings Securities LLC, Barings (U.K.) Limited, Barings Australia Pty Ltd, Barings Japan Limited, Baring Asset Management Limited, Baring International Investment Limited, Baring Fund Managers Limited, Baring International Fund Managers (Ireland) Limited, Baring Asset Management (Asia) Limited, Baring SICE (Taiwan) Limited, Baring Asset Management Switzerland Sarl, Baring Asset Management Korea Limited, and Barings Singapore Pte. Ltd. each are affiliated financial service companies owned by Barings LLC (each, individually, an “Affiliate”). Some Affiliates may act as an introducer or distributor of the products and services of some others and may be paid a fee for doing so.

NO OFFER: The document is for informational purposes only and is not an offer or solicitation for the purchase or sale of any financial instrument or service in any jurisdiction. The material herein was prepared without any consideration of the investment objectives, financial situation or particular needs of anyone who may receive it. This document is not, and must not be treated as, investment advice, an investment recommendation, investment research, or a recommendation about the suitability or appropriateness of any security, commodity, investment, or particular investment strategy, and must not be construed as a projection or prediction.

Unless otherwise mentioned, the views contained in this document are those of Barings. These views are made in good faith in relation to the facts known at the time of preparation and are subject to change without notice. Individual portfolio management teams may hold different views than the views expressed herein and may make different investment decisions for different clients. Parts of this document may be based on information received from sources we believe to be reliable. Although every effort is taken to ensure that the information contained in this document is accurate, Barings makes no representation or warranty, express or implied, regarding the accuracy, completeness or adequacy of the information.

Any service, security, investment or product outlined in this document may not be suitable for a prospective investor or available in their jurisdiction.

Copyright and Trademark
Copyright © 2025 Barings. Information in this document may be used for your own personal use, but may not be altered, reproduced or distributed without Barings’ consent.

The BARINGS name and logo design are trademarks of Barings and are registered in U.S. Patent and Trademark Office and in other countries around the world. All rights are reserved.