THE NEW KIDS ON THE BLOCK: INVESTORS CHANGE FOCUS.

Author:Price, John
Position:OPINION: THE CONTRARIAN
 
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"The last two years have demonstrated both positively and negatively how quickly investment climates can be altered by political discourse and elections. The next 12 months will prove pivotal with elections in Chile, Colombia, Mexico and Brazil."

For the last 15 years, foreign investors favored Brazil and Pacific Alliance members--Mexico, Chile, Colombia, and Peru. In 2015, these five markets captured 80% of all foreign direct investment (FDI) in the Latin America and Caribbean region. However, the collapse of natural resource prices sabotaged the currencies of these countries and, with them, investor confidence.

Strained fiscal conditions combined with a social media revolution led to unprecedented public scrutiny. President Dilma Roussef fwas impeached, former President Humala (Pern) is in jail, and the popularity levels of Temer (Brazil), Pena Nieto (Mexico), Santos (Colombia), and Bachelet (Chile) are at historic lows. Some may face legal action once they leave office in 2018.

Weakened Presidential mandates in all five countries (including PPK in Peru) have led to congressional gridlock and little to no advancement on essential reforms.

Investors are wary, not only of the dysfunctional politics of today in these countries but also of the political risk that upcoming elections may unleash.

The leaders of Argentina and Ecuador, by contrast, have enjoyed early support for reform. Macri's administration leapt out of the gate reversing no less than six investment policies that kept the Kirchners in power but undermined Argentina's international standing. Macri's reforms have met with resistance but not enough to jeopardize the path of economic modernization. Fifteen...

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