Cash-Rich Investors Wait to Pounce

When the dust settles from the global crisis and stability returns, investors say there will be attractive buying opportunities in LatAm for those with liquidity. “I would expect investor attention to return to emerging markets generally before too long,” says Allan Conway, head of EM equity at Schroders. “They have been inappropriately oversold. If you are prepared to take an 18-24 month view, prices will look very cheap over that timeframe,” adds the investor, whose fund has $12bn under management in EM. Richard Madigan, chief investment strategist and portfolio manager at JPMorgan Asset Management, finds valuations seen from September through November are technically driven rather than fundamental. “We’ve gone back to valuations of 5-10 years ago in certain markets, where I’d argue those markets are radically different in what we see in structural and policy reform,” he adds. Corporates are also likely to see buyers. “If you are in a situation where you can spend money, you can get the best companies anywhere on the yield curve you want at a very compelling price for the investor,” says Mike Gagliardi, portfolio manager at HSBC Halbis, which manages $4bn in EM. “Why go with a second or third-tier credit that yields 30%, when you can get a top-tier that yields 25%?” In the region’s past crises, Galgiardi finds LatAm lacked the policy discipline it now has. It may also present a better opportunity than other EM regions such as Eastern Europe, as its corporate names are more established. (For the complete buyside outlook, see the December issue of LatinFinance at www.latinfinance.com.)