Two economies set to benefit from major US moves

There are some structural and cyclical changes taking place in these regions that are throwing up opportunities for bottom-up investors.

This video first appeared on Livewire 12 April 2024

Two major US moves and trends could see investors swarm to opportunities in two out-of-love regions over the next few months. 

That's according to Fidelity International's Amit Goel, who believes the US Federal Reserve's anticipated rate cuts in the latter stage of the year, and a shift to near-shoring as the country moves to loosen its ties to China, are creating both cyclical and structural opportunities in Mexico and Brazil.

"Brazil has about an 8% real rate, which is very high for any country. So whenever you see the Fed cutting rates, which probably happens in the second half of the year, Brazil has a lot of monetary room to ease, which can drive the markets," he explains.

"When it comes to Mexico, they're benefiting from the diversification of global supply chains. The US is trying to import less from China and in turn, is importing more from countries like Mexico, India, and ASEAN. Mexico, being very close to the US, benefits more from that."

In this episode of The Pitch, Goel outlines some of the major trends driving opportunities in Brazil and Mexico and some of the risks involved in investing in Latin American companies. He also explains why, despite these risks, there are still good risk-adjusted returns to be had in these countries.