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Why Latin America is Attractive to Global Investors · Merryn Talks Money

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Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News. Welcome to Marin Talks Money,
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Speaker 1: the podcast in which people who know the markets explain
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Speaker 1: the markets. I'm Meren Sunset Web. This week, I want
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Speaker 1: to focus in on a market that I think global
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Speaker 1: portfolios are not paying enough attention to, Latin America. I
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Speaker 1: wrote a column a few weeks ago which I hope
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Speaker 1: you all read, making the case for investors to think
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Speaker 1: more actively about the region. It's currently very cheap relative
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Speaker 1: to more expensive markets such as the US in particular,
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Speaker 1: and also cheap relative to much of the rest of
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Speaker 1: the emerging markets universe. There's a lot of good dividends
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Speaker 1: around as well, and of course it's often passed up
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Speaker 1: because it's categorized as an emerging market and all lumped
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Speaker 1: together as one, and this of course is very misleading.
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Speaker 1: So in this episode are going to talk about the
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Speaker 1: investment potential of Latin America. And joining me to do
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Speaker 1: that is Jose Manuel Silba, the chief investment officer and
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Speaker 1: partner of laren Vial Asset Management, which is one of
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Speaker 1: the leading investment houses in Chile. Welcome Jose, Thank you
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Speaker 1: so much for joining us today.
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Speaker 2: Thank you very much, joining good morning for us, good
1:18
Speaker 2: after for you, probably in for me.
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Speaker 1: Absolutely, we've got quite a lot to get through. So
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Speaker 1: let's just start, if you don't mind, by addressing this
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Speaker 1: issue of the emerging markets categorization. If you look up
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Speaker 1: the MSCI Emerging Markets Index, you will find that in
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Speaker 1: there you have Brazil named as sort of four point
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Speaker 1: four percent of the index. Nothing else in Latin America
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Speaker 1: is mentioned at all. It's all just under other, a
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Speaker 1: little bit of lump of the other, nothing special in there.
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Speaker 1: And the question, of course is whether many of these
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Speaker 1: markets should even be classified as emerging markets at all.
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Speaker 1: None of it really makes sense, does it.
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Speaker 2: Yeah, Because, for instance, in the emerging markets you have
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Speaker 2: countries like Taiwan or South Korea which probably you define
2:00
Speaker 2: them as developed countries today. And additionally, of course it's
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Speaker 2: a categorization which mixes countries with very different type of
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Speaker 2: microeconomic and microeconomic settings. Companies or countries which are very
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Speaker 2: related to Asia, to China, to the Chinese microeconomic I
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Speaker 2: would say cycle, some other countries which are much more
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Speaker 2: related to the European economic cycle, and others much more
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Speaker 2: related to the US economic cycle. Countries which produce technology.
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Speaker 2: After the countries produce a lot of commodities. But really
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Speaker 2: you are mixing there a lot of different countries, and
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Speaker 2: actually even in the Latin universe you have quite a
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Speaker 2: mix of countries and different types of I would say
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Speaker 2: macro and microeconomic settings.
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Speaker 1: And there's also the sense, isn't it that if something
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Speaker 1: is an emerging market, it comes with weak institutions and
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Speaker 1: almost the sense of some kind of political chaos or volatility.
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Speaker 1: And that is something that one may in the past
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Speaker 1: have associated with Latin mimer. There's political volatility all over
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Speaker 1: the place, but at the moment you look around the
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Speaker 1: world and we've got a bastion in stability here.
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Speaker 2: Yeah, what happens is, luckily the developed world has become
3:10
Speaker 2: more volatile, I would say in terms of institutions, some
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Speaker 2: of the institutions that have made the developed world what
3:17
Speaker 2: it is are I would say, under attack those four
3:21
Speaker 2: apps that Professor Neil Ferguson always says that the Western
3:24
Speaker 2: world downloaded so that the Western world became what it
3:28
Speaker 2: is now. Probably a lot of people are doubting if
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Speaker 2: it was a good idea to download those apps, which
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Speaker 2: I think is a bigger or to have that idea.
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Speaker 2: But really, and on this hand that the emerging market countries,
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Speaker 2: many of them have been doing quite a lot of
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Speaker 2: reforms in the last thirty four years, twenty five years.
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Speaker 2: That's the case of America, but also that's what you
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Speaker 2: see in Asia. Some of those countries are growing a
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Speaker 2: lot and are improving the institutions a lot. In many ways,
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Speaker 2: they still have weak in situations, but I would say
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Speaker 2: the gap between the spe quality spread between institutions between
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Speaker 2: the developed world and the emerging market world have closen, yeah,
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Speaker 2: very much. So twenty years I would say.
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Speaker 1: Yeah, while we're talking about political stability, let's have a
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Speaker 1: quick talk about the United States trumps America and how
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Speaker 1: that affects the region as a whole. We might come
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Speaker 1: onto more specific countries in our relationships with the US
4:26
Speaker 1: no of course, for China later, but as an overall view,
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Speaker 1: how does Trump's America affect the relationship with Latin America.
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Speaker 2: It's difficult to say, because on the one hand, of course,
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Speaker 2: you see a United States which in a way it's
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Speaker 2: closing on itself or probably after many many years where
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Speaker 2: the United States was the guy that led the globalization
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Speaker 2: process and led institutions that in a way, the developidation tours.
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Speaker 2: You know, all agreement after the World War, you know,
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Speaker 2: the gap agreements and now called WTO and how the
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Speaker 2: US led the world after the Berlin World fell. All
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Speaker 2: of that is under I would say attack. Now in
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Speaker 2: the US. Probably it's true that there's a part of
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Speaker 2: the US middle class that was under heavy attack by
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Speaker 2: Asian competition. So probably that those people are a bit
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Speaker 2: angry under wages and under instability, and so in a
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Speaker 2: way one feels that the US is closing itself, you know.
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Speaker 2: It's there's a book which is called the Closing of
5:31
Speaker 2: the American Mind by HOWD Blumer. We could call this
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Speaker 2: the closing of the American market.
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Speaker 1: Yeah, this could be a positive in some ways for
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Speaker 1: Latin America because from America is pulling back from the
5:41
Speaker 1: wider world that's pulling back into the Americas.
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Speaker 2: Yes, that's true. That's for instance. That's why what our
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Speaker 2: partner Leuvan Song gav have suggested for some years now.
5:51
Speaker 2: He talks about Fort Monroe, you know, relating this to
5:55
Speaker 2: the Monroe Doctrine, which was this rectrem in the nineteenth
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Speaker 2: century who said America's to the Americans, you know, so
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Speaker 2: keep the European powers out of the America. And in
6:04
Speaker 2: a way now the US is saying we should perhaps
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Speaker 2: retreat to this fortress, you know, fortress America. They talk
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Speaker 2: about the Western world, and there was involved for them
6:14
Speaker 2: is all of the Americas. And for instance, Predident Trump
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Speaker 2: appointed a point and first minister. He's a Latin, Marco Rubio.
6:23
Speaker 2: He is married to a Columbian lady. He knows very
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Speaker 2: well Latin America. He's a friend of many politicians in
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Speaker 2: the region. He's second in command. Also was a former
6:35
Speaker 2: ambassador to Mexico, and when he was a young guy,
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Speaker 2: he was the son of the ambassador, the US ambassador
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Speaker 2: in Chile, in Venezuela and Paraguay. So he's also a
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Speaker 2: guy that knows perfectly well what's happening in the region.
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Speaker 2: So for the first time you have a team inside
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Speaker 2: the White House that really knows Latin America and knows
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Speaker 2: the process, the minuses who is who and so why
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Speaker 2: would to say that the US will try to enhance
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Speaker 2: its relationship with Latin America, especially its economic relationship. Well,
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Speaker 2: the US has already signed retrade agreements with several Latin
7:15
Speaker 2: American countries. The first one was the Chillian one, but
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Speaker 2: not the only one now, So I would say that
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Speaker 2: the US, probably if it wants to retreat from the
7:26
Speaker 2: rest of the world, needs in a way Latin America needs.
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Speaker 2: Latin America's markets, needs its Latin America's demography needs Latin
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Speaker 2: America's commodities. This could be the beginning of interesting times
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Speaker 2: for Latin America. I agree with that.
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Speaker 1: And it also one more thing you didn't mention in
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Speaker 1: that list was Latin America's high end manufacturing abilities. So Mexico,
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Speaker 1: for example, is turning itself into a high end manufacturing hub.
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Speaker 2: Or we talk about.
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Speaker 1: Friend sharing and close shoring, and Mexico is the obvious
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Speaker 1: home for that kind of maney for sure.
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Speaker 2: And actually one of the interesting things about that in
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Speaker 2: America is that in a way you have had thirty
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Speaker 2: years of economic reform. Really the microeconomic reforms began in
8:07
Speaker 2: Chile in the seventies, eighties and nineties with what they
8:11
Speaker 2: called the Chicago Boys. You know, it was a free
8:13
Speaker 2: market reform, the regulation, privatization, opening up the economy. Many
8:19
Speaker 2: other lat the American countries copied Chile was the case
8:22
Speaker 2: of Peru, partially Colombia in a way partially Mexico too,
8:27
Speaker 2: because of the success, Chile became a laggard in the
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Speaker 2: region in the seventies and became one of the wealthiest
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Speaker 2: countries in the region in the late nineties and during
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Speaker 2: the first decades of this century. So countries followed that path,
8:44
Speaker 2: and even the two giants the region, you know, Mexico
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Speaker 2: and Brazil, have reformed a lot of their institutions, especially
8:52
Speaker 2: macro institutions, so they have now central banks which are
8:56
Speaker 2: quite independent. In the case of Brazil, you don't have
9:00
Speaker 2: hyperinflation anymore. In the case of Mexico neither. The last
9:04
Speaker 2: country probably to have hyperinflation was Argentina, and it seems
9:07
Speaker 2: that with President Milay they are away controlling the beasts,
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Speaker 2: the fiscal beasts and the hyperinflation beasts. So in a
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Speaker 2: way for the US it makes a lot of sense
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Speaker 2: to integrate more with this region. But this, as you mentioned,
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Speaker 2: part of this reform is that some countries, especially Mexico
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Speaker 2: and Brazil, have now very high end manufacturing activity. But
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Speaker 2: you have the carry industry of course in Mexico, but
9:36
Speaker 2: for instance, in Brazil you have a company like Embraer
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Speaker 2: which produces airplanes, and they produce commercial airplanes that are
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Speaker 2: gaining market sail all over the world, and they actually
9:45
Speaker 2: they are benefiting from the problems from Boyling and partially Airbostole.
9:51
Speaker 2: Now they are selling actually a military transport airplane to
9:55
Speaker 2: NATO countries Embryer. So really you have very interesting industrial
10:01
Speaker 2: companies in the region.
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Speaker 1: Yeah, then you have one thing that we haven't mentioned
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Speaker 1: yet is a slightly lower level of debt risk than
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Speaker 1: you might have and some what we consider to be
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Speaker 1: very developed countries. So debt to GDP ratios across Latin
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Speaker 1: America are slightly lower than elsewhere. And I think is
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Speaker 1: it highest in Brazil. The high in Brazil eighty percent,
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Speaker 1: but others are below that. When you think that, you know,
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Speaker 1: UK is one hundred and other western countries are well
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Speaker 1: over that. That's slightly reasering too.
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Speaker 2: Yeah, Chile has around forty percent, Mexico is fifty percent,
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Speaker 2: Columbia sixty percent, Rules thirty five percent of GDP. So really,
10:35
Speaker 2: it's true that one of the main reforms that Latin
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Speaker 2: America has done in the last thirty years is was
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Speaker 2: called the macro reforms with these independent central banks thanks
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Speaker 2: to privatizations all over the place. Because we have had
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Speaker 2: privatizations from Mexico to the Cave Horn. And because of that,
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Speaker 2: now physcal deficits are more controlled because in the past,
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Speaker 2: part of the physical defic it's where due to financing
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Speaker 2: state owned companies, you know, and now many of those
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Speaker 2: companies have been privatized. They are very productive companies, or
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Speaker 2: they are partially privatized, and that's the case of companies
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Speaker 2: like Eco Patrol, the oil producing company in Colombia, or
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Speaker 2: Petro Bras in Brazil, you know, Brazil. Very few people
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Speaker 2: realize that Brazil is becoming an oil giant. Today. Brazil
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Speaker 2: is the largest oil producing country in Latin America. And
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Speaker 2: now not only Brazil is self sufficient in oil, which
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Speaker 2: was not the case forty years ago, but Brazil is
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Speaker 2: becoming a large exporter of oil. And it's partially done
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Speaker 2: by Petro Brass, but also by new private, mid sized
11:42
Speaker 2: private companies in the oil industry. Some of those companies,
11:46
Speaker 2: we invest in them and in their bonds and their inequities.
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Speaker 2: And it's very interesting what's happening in Brazil in the
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Speaker 2: oil field.
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Speaker 1: And this is really interesting because one of the criticisms
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Speaker 1: that has been made historically of Latin American economies is
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Speaker 1: that they have failed somehow to proper monetized their enormous
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Speaker 1: natural resources. So you know, so many Latin American countries
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Speaker 1: are so rich and everything from copper to oil, to lithium, etc.
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Speaker 1: But somehow it hasn't quite been monetized properly. So Brazil
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Speaker 1: and oil turns out to be a positive way forward
12:14
Speaker 1: for that. And then of course as we move through
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Speaker 1: the energy transition, or we attempt to move through the
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Speaker 1: energy transition, and electricity demand goes up, then all these
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Speaker 1: other metals wearers, and Latin America is very rich and
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Speaker 1: weres become an extraordinary resource that with a stable economic background,
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Speaker 1: can be much better monetized than in the past.
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Speaker 2: Yeah, they're actually, to be honest, once again, the poster
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Speaker 2: child in the region in terms of monetization of mineral resources.
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Speaker 2: For Chile, Chili created a very pro market and pro
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Speaker 2: private property mining law in the late seventies early eighties
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Speaker 2: that produced a boom in exploration and then a boom
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Speaker 2: in copper production that allowed Chile to become the largest
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Speaker 2: copper producer in the world and Peruna is the second
13:01
Speaker 2: largest copper producer in the world. Chile also produces a
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Speaker 2: lot of lithium.
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Speaker 1: As i'spayed some fastson there about let'sium mining and the
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Speaker 1: environmental problems.
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Speaker 2: Lithium in Chile is extracted from what they call the brines,
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Speaker 2: those are salt lakes in the desert. The same thing
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Speaker 2: will happen in Argentina actually, and probably impartially in Bolivia.
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Speaker 2: Bolivia is a country that probably has less monetized its
13:26
Speaker 2: natural resources. But in the case of Argentina, once again,
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Speaker 2: what's happening there is very interesting because Argentina is beginning
13:32
Speaker 2: to monetize it's lithium wealth, it's mineral wealth, but also
13:37
Speaker 2: it's oil wealth. Argentina discovered a few years ago very
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Speaker 2: large shale oil and shale gas deposit called Vacamuerta, and
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Speaker 2: even the Kishners allowed the developer of that deposited because
13:53
Speaker 2: they realized that Argentina couldn't afford not to develop it.
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Speaker 2: And Argentina also is very very rapidly becoming the second
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Speaker 2: largest gas and oil produced producing country in Latin America,
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Speaker 2: and probably in the next few years Vacamuerta deposit will
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Speaker 2: become a huge, huge exporter of gas for Argentina.
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Speaker 1: Interesting. So we have this region with this stableish economic environment,
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Speaker 1: stable age, political environment, high end manufacturing, rising middle class,
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Speaker 1: massive resource potential. So it kind of sounds perfect and
14:29
Speaker 1: you can get it across the board on a valuation
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Speaker 1: significantly lower than as family average pe across Latin America
14:35
Speaker 1: or something like nine times.
14:36
Speaker 2: Right, we have risks, We have political risks. There is
14:39
Speaker 2: still a left wing in American sector. Actually, we just
14:44
Speaker 2: had primaries for the left in Chile and it was
14:48
Speaker 2: the Communist party Candya that won the primaries with very
14:53
Speaker 2: low participation of people, et cetera, et cetera, but it
14:55
Speaker 2: was the Communist party that one. So you say, well,
14:58
Speaker 2: there is a risk, but the risk in a way
15:02
Speaker 2: is embedded invaluation, because we are talking that among emerging markets,
15:07
Speaker 2: Latin America is trading probably one or one half standard
15:11
Speaker 2: deviation below the average of the last twenty five years
15:15
Speaker 2: compared to emerging markets, which themselves are trading at the
15:19
Speaker 2: very low multiples compared to developed especially in the US.
15:24
Speaker 2: So really a lot of bad news are embedded in
15:28
Speaker 2: Latin American asset prices, equity prices, but also you know
15:34
Speaker 2: interest rates. For instance, there is another asset class which
15:39
Speaker 2: is very less well known, is latinm corporate credit. In
15:46
Speaker 2: heart currency. You know, we manage a fund that invests
15:50
Speaker 2: in Latin art currency bonds. So those are bonds issued
15:55
Speaker 2: by the blue chips all over the region that issue
15:58
Speaker 2: bonds offshore using you do it in dollars, and those
16:02
Speaker 2: are bonds which have a current deal of around eight
16:04
Speaker 2: percent dollar dominated. And I always say that you have
16:07
Speaker 2: their sort of a restrating arbitrash because these are cambris
16:11
Speaker 2: which if they had their headquarters in Miami, they would
16:15
Speaker 2: be classified as an investment grade. But since they have
16:19
Speaker 2: their headquarters in South Paolo or in something or Bogota,
16:25
Speaker 2: they are high yield. Yes, you have a lot of
16:28
Speaker 2: assets which are very interesting training at low multiples or
16:32
Speaker 2: high yields. So with a lot of add news and
16:36
Speaker 2: budded enter prices and with a you, I would say
16:39
Speaker 2: good stories, you know, good company stories, good macro stories.
16:43
Speaker 2: Probably people have a lot of investors don't realize the
16:47
Speaker 2: interesting things that that happen year.
16:50
Speaker 1: Let's talk a little bit about how you invested and
16:52
Speaker 1: where you invest at my fun fact of the day
16:54
Speaker 1: that someone told me this morning, as it only takes
16:56
Speaker 1: an hour longer to fly from London to South Paler
16:59
Speaker 1: than from Power to Mexico City, so you know you
17:02
Speaker 1: are covering an insanely large area when it comes to
17:06
Speaker 1: looking at companies, and your website tells me that the
17:10
Speaker 1: company that you fund managers are visiting two hundred companies
17:13
Speaker 1: a year, so you must be spending most of your
17:15
Speaker 1: life on an aeroplane, are you? How are you choosing
17:17
Speaker 1: companies to invest in?
17:19
Speaker 2: Yeah, we use several techniques, O say. First, of course,
17:23
Speaker 2: we try to know very deeply the region, so we
17:26
Speaker 2: travel a lot. We have a lot of also a
17:29
Speaker 2: network of friends, i would say now at the end
17:32
Speaker 2: of the days, all over the regions. So we have
17:34
Speaker 2: been vesting in the region for the last forty fifty years.
17:39
Speaker 2: Lambia my company has ninety years history, so we have
17:42
Speaker 2: been helping Chileans invest in the region for many, many years.
17:47
Speaker 2: Of course, we have the advantage of the language, so
17:49
Speaker 2: even if it's a very huge market in terms of
17:52
Speaker 2: hours over the plane, we most of us speak Spanish
17:58
Speaker 2: or Portuguese or port tool which is sort of a
18:01
Speaker 2: blend between the Brazilian Portuguese and our Spanish, so we
18:06
Speaker 2: we tend to understand ourselves, so we have a sort
18:10
Speaker 2: of a common culture, even if it's the mex Mexicans
18:12
Speaker 2: are very different from Chileans, and Chili's are very different
18:15
Speaker 2: from Peruvians and Colombians, but we have the same language.
18:18
Speaker 2: Then of course we use a very sophisticated i would
18:22
Speaker 2: say quant model to get new ideas and control risk.
18:27
Speaker 2: And so with the quant model, we see what are
18:29
Speaker 2: the i would say most interesting companies all over the region,
18:33
Speaker 2: and then we travel. You know, we have our analysts
18:36
Speaker 2: are located mostly in Santiago. We have some analysts in Lima,
18:40
Speaker 2: some analysts now in Argentina too, but we travel a
18:43
Speaker 2: lot and also a lot of Latin American companies come
18:47
Speaker 2: to Santiago. Santiago has become sort of a pension pub
18:52
Speaker 2: you know, Chile has around three hundred and fifty billion
18:57
Speaker 2: dollars in pension funds undermanaged.
19:00
Speaker 1: Recently been some significant reforms to depends and system in
19:03
Speaker 1: Chile right which means that there should be going forward
19:06
Speaker 1: significantly higher flows into the actual market.
19:09
Speaker 2: And in Mexico. That's another interesting thing that has happened
19:12
Speaker 2: in the last I would say thirty years, is that
19:15
Speaker 2: for the first time in latinin history, you have local
19:20
Speaker 2: investors in local currency which are investing for the long term.
19:26
Speaker 2: For instance, in the past, when a Latin blue chip
19:30
Speaker 2: needed money, they needed to issue in dollars, because it
19:35
Speaker 2: didn't they couldn't issue bonds locally. Now in many of
19:39
Speaker 2: our markets, Mexico, Peru, Chile, Brazil, you have an internal,
19:46
Speaker 2: wide developed bond market in local currency, which is the
19:50
Speaker 2: biggest investors are institutional investors, and that has helped a
19:55
Speaker 2: lot in terms of reducing the risk, the macroeconomic risk,
20:00
Speaker 2: because the typical microeconomic risk that Lat'm facing the past
20:04
Speaker 2: is that suddenly you have commodities coming down to price
20:08
Speaker 2: and so the effects you know, the currency is devalued,
20:12
Speaker 2: but you also had a lot of external debt government
20:17
Speaker 2: and also corporations. Now you still have volatility in the
20:21
Speaker 2: prices of commodities. That's normal. Part of the death of
20:25
Speaker 2: local corporates, of local banks and local government is issued
20:30
Speaker 2: in local currency, which.
20:31
Speaker 1: Must have been helpful for Mexico and Brazil last year
20:34
Speaker 1: because both so that currency is weakened substantially.
20:37
Speaker 2: That's right, that's right, And in the case of Chile
20:39
Speaker 2: to Perutu, today I would say the cost of capital
20:43
Speaker 2: of many of local corporates is lower than in the past.
20:48
Speaker 2: If you consider that now they do not need to
20:51
Speaker 2: hedge their external debt because they are issuing bonds in
20:56
Speaker 2: the local markets and that's helping a lot.
21:00
Speaker 1: Quite not about Argentina, but can you imagine any of
21:03
Speaker 1: your funds investing in Argentina because they don't at the moment,
21:06
Speaker 1: you don't hold Argentina and equity.
21:08
Speaker 2: Well, we know, we invest, especially in Latin Argentina's bonds,
21:13
Speaker 2: corporate bonds, and those are dollar denominated corporate bonds. So
21:18
Speaker 2: we have core bonds of companies like YPF, you know,
21:22
Speaker 2: the oil producer in Argentina, the one that is producing
21:24
Speaker 2: the oil in Baca Guerta, or another oil producing companies
21:28
Speaker 2: like Pampa or Vista. Lately, we are beginning, especially since
21:33
Speaker 2: we realize that the Milai reforms are going on track.
21:36
Speaker 2: They're working, they're working. We are beginning very slowly to
21:41
Speaker 2: invest in some equities. Additionally, what happens is that you
21:45
Speaker 2: have some Latin American companies, especially the Chilian ones, that
21:50
Speaker 2: have Argentina and assets which until now they were valued
21:55
Speaker 2: at zero. So you have a company in Chile called Senkosuits,
22:00
Speaker 2: one of the largest retailers in Latin America. They are
22:03
Speaker 2: in supermarket, hypermarket department stores, do it yourself stores, and
22:09
Speaker 2: they are one of the leading companies in all those
22:12
Speaker 2: fields in Chile, in Peru, in Colombia. They even have
22:16
Speaker 2: a high end supermarket in the States. But probably in
22:20
Speaker 2: the mid nineties, one of the largest assets of sen
22:24
Speaker 2: Cosut was Argentina and they still have it. They still
22:28
Speaker 2: have it. The problem is that in the last twenty
22:31
Speaker 2: years investors have said, Okay, we're going to value those
22:35
Speaker 2: assets in Argentina zero. We don't count on them now
22:40
Speaker 2: that Argentina is going up. These guys have a huge
22:44
Speaker 2: supermarket hypermarket business in Argentina, they have a do it
22:47
Speaker 2: yourself retail stores in Argentina, they have males in Argentina,
22:52
Speaker 2: and actually when you buy the Argentina ETF, you are
22:57
Speaker 2: buying also sen Cosuit, for instance, the co Oak Butler
23:01
Speaker 2: in Santiago, which also has a huge position in Argentina.
23:05
Speaker 2: Once again, in the past everybody said, okay, let's consider
23:09
Speaker 2: those Argentina and assets as valueless. You know, they're worthless,
23:14
Speaker 2: so we're not going to value and both the Yao
23:17
Speaker 2: and Dina that's the name of the company, which also
23:19
Speaker 2: has bottling operations in Brazil and in Paraguay. But now
23:24
Speaker 2: suddenly the boatling operations in Argentina are beginning to be valued,
23:29
Speaker 2: so you.
23:29
Speaker 1: Can get access to the Argentinian market without having to
23:32
Speaker 1: buy an equations in Argentina.
23:34
Speaker 2: Sorry, you have a company like Medcaalo Liver. Mercalo Liver
23:38
Speaker 2: is the largest e commerce company in Latin America. Actually
23:41
Speaker 2: it was founded by Argentinians, which shows Argentinians have an
23:46
Speaker 2: incredible human capital resource. All over Wall Street is full
23:51
Speaker 2: of Argentinians. You know. Merkelo Liver was founded by our
23:54
Speaker 2: Argentina entrepreneurs. It's located in the US, so that it's
23:58
Speaker 2: incorporated in the US under US law. But now it's
24:01
Speaker 2: the largest e commerce company all over the region in
24:04
Speaker 2: Latin America, and it has huge operations in Argentina. Once again,
24:08
Speaker 2: if Argentina begins to go up to grow to consume market,
24:14
Speaker 2: delivery will enjoy a lot. What will happen in Argentina.
24:18
Speaker 1: Do you have a favorite market among the other main
24:20
Speaker 1: markets in Latin America. You live in Chile.
24:23
Speaker 2: One of the advantages of living in Chile is that
24:26
Speaker 2: we do not have Brazilian home bias or the Mexican
24:29
Speaker 2: home bias. But since we're the smallest country of all
24:33
Speaker 2: of the large ones in Latin America. We have to
24:35
Speaker 2: invest in Brazil, we have to invest in Argentina, we
24:38
Speaker 2: have to invest in Mexico. And in a way more
24:42
Speaker 2: than being a lot of a country in itself or
24:45
Speaker 2: a market, we try to fall in love with companies
24:49
Speaker 2: and we find incredible companies in Mexico, in Brazil, now
24:55
Speaker 2: in Argentina, to in Peru, you have very good companies.
24:58
Speaker 2: The market is smaller in prou less liquid, but you
25:01
Speaker 2: have an incredible bank like the Creditor Peru, which is
25:05
Speaker 2: a very very well run bank. You have good stories,
25:08
Speaker 2: you know, in the retail sector in Peru. You have
25:10
Speaker 2: good banks in Colombia too. We are a very bottom
25:13
Speaker 2: uped house. We do a lot of research. We try
25:16
Speaker 2: to really meet all the companies with the senior management.
25:20
Speaker 2: We build very sophisticated I would say evaluation models. So
25:24
Speaker 2: in a way we try to fall in love companies.
25:26
Speaker 1: Everyone hates it when I asked this question. Everyone hates
25:29
Speaker 1: to have to peck one. But if you're falling in
25:30
Speaker 1: love with a company, what are you most in love
25:33
Speaker 1: with at the moment?
25:34
Speaker 2: We like very much mercaal Oliberty. You know, this e
25:36
Speaker 2: commerce giant in Latin America. We like their growth, We
25:40
Speaker 2: like what they're doing in the fintech area. We like
25:44
Speaker 2: also Empire, you know, the industrial giant in Brazil which
25:47
Speaker 2: builds very good quality planes. Also is in the defense area.
25:51
Speaker 2: But we like also commodity producing companies like Petro Brass.
25:55
Speaker 2: You know, Petro Brass has an incredible dividend yield, it growing.
25:59
Speaker 2: You know what is the yield the tough one today
26:02
Speaker 2: Paturize is probably yielding between eight and nine percent per year. Lovely,
26:07
Speaker 2: our portfolio is yielding around six percent, so you have
26:10
Speaker 2: yield in Latin American you know, a divon yield. There
26:13
Speaker 2: is a bunch of companies that yield more than ten percent. Now,
26:16
Speaker 2: our portfolio have a mix of high devn yielders and
26:20
Speaker 2: also high growth like Mercaaloibri would be a high growth company.
26:26
Speaker 2: Also a very interesting internet bank called new Bank. New
26:29
Speaker 2: Bank now is a huge bank in Brazil. It's entering
26:32
Speaker 2: the Mexican market. It's entering also the Argentinian market. So
26:37
Speaker 2: you have also technological companies in the region. You have
26:39
Speaker 2: a company called Totus in Brazil which is an ERP
26:42
Speaker 2: you know, enterprise reserve, especially for mid sized companies. You
26:49
Speaker 2: have very good quality industrial companies. You know, we have
26:53
Speaker 2: two funds. You know, we have a large LUGP fund,
26:57
Speaker 2: but also we have a small meatcap and ditricity. With
27:00
Speaker 2: a small meatcap fund is that you have less less commodities,
27:04
Speaker 2: less banks, and more industrial companies, more healthcare. You have
27:09
Speaker 2: a very interesting companies in the healthcare. So really with
27:12
Speaker 2: so strange, Yeah, we have most of the sectors present
27:16
Speaker 2: in the index.
27:17
Speaker 1: Brilliant. Well, I think you probably convinced everybody that's to
27:21
Speaker 1: do it. You mentioned the book earlier, the closing of
27:25
Speaker 1: the American Mind. Are you a agree? What are you
27:27
Speaker 1: reading at the moment?
27:28
Speaker 2: Oh? Well, I am reading a book about Bob Francis,
27:31
Speaker 2: which was written by Javier Circa with a very famous
27:34
Speaker 2: Spanish author.
27:36
Speaker 1: Turns great, we'll put that on everyone summer reading less.
27:39
Speaker 1: Thank you very very much, indeed, we really appreciate you
27:41
Speaker 1: coming on.
27:42
Speaker 2: Thankre Maturin, and I hope I convinced someone to get
27:45
Speaker 2: a view in the region.
27:53
Speaker 1: Thanks for listening to this week Marin Jog's Money. If
27:55
Speaker 1: you like us a rate review and subscribe by every
27:57
Speaker 1: listening to podcast and keep sending questions or comments Marimani
28:00
Speaker 1: at Bloomberg dot net. You can also follow me and
28:02
Speaker 1: John on Twitter or x. I'm at marianeess w and
28:05
Speaker 1: John is John Underscores Epect. This episode was hosted by
28:08
Speaker 1: me Marin Suset Web, produced by Samasadi and special thanks,
28:12
Speaker 1: of course to host it.