Equity Buyside Remains Confident

Volatility has played with equity indexes in the past year, though the region’s long-term equity investors still like LatAm’s fundamentals, and are selectively adding to their favorite positions. And even if it has been long touted and picked over, they still believe in the domestic growth story, with the right names. “The domestic growth story is still very much intact,” Will Landers, senior portfolio manager at BlackRock, which has $1.56trn in equities under management, tells LatinFinance. Landers sees Brazil trading at levels of around 11.5x 2012 earnings, and 10.0x 2013 earnings. He says he doesn’t find the country too expensive, based on the growth seen in many of its companies. Retailers selectively continue to look good to him, with some expensive and others justifying their valuations. Many of the small caps are attractive, says Landers, who is restricted from discussing specific stocks not in the portfolio’s top 10. He identifies retailer Hering and brewer AmBev as two important consumer-focused holdings. “The market hasn’t really done much for 2 years now, and on a price-to-earnings basis most countries are trading in line with or at a small discount to their historical averages. It’s a reasonable entry point. It’s always difficult to time the turnaround, but if you take a medium-term view it seems to make sense to be building a position,” Ian Simmons, portfolio manager at Charlemagne Capital, tells LatinFinance. The key for his fund has been defensive stocks that can still grow in a downturn, such as Brazilian IT provider Totvs. “You have to try to look through some of the noise. In the last 12 months there were a lot of headlines about inflation and monetary policy and the central bank losing independence and so on. But the reality was that the operating numbers for most of these companies still show strong demand and they are companies that are able to grow,” Simmons says. With the threats of external shocks abating, policy decision remains the major ri