As we embark upon a new year, the Templeton Emerging Markets Group headed by Mark Mobius believes 2014 could be an important year for many emerging markets, possibly establishing trends that could play out through much of the remainder of the decade. In particular, Chinese government reform initiatives announced in late 2013 could have far-reaching significance. And major elections in a number of countries in 2014 could bring dramatic (or not-so-dramatic) changes.
These are some of the thoughts about Latin America highlighted in Mark Mobius’ blog, Investment Adventures in Emerging Markets. According to Mobius, Central and South America also could continue to provide investors appealing long-term investment opportunities across a range of sectors and countries.
As consumption patterns in Brazil continue to evolve as per capita income increases, Franklin Templeton expects the country to become a leading consumer of products (both non-durable and durable) not only produced in Brazil but also those imported from regional and global markets. Moreover, Brazil will be hosting the World Cup in 2014 and the Olympics in 2016. “As a result, we have already seen and expect to continue to see the country investing significantly in infrastructure. This should help drive economic growth in the coming years as well as improve the basis for stronger sustainable growth in the long-term, in our view”.
Mobius highlights that the Mexican market has been benefiting from significant investor interest recently, especially as the outlook for the US, which is Mexico’s largest trading partner, has been improving. Mexico’s competitiveness to supply the US has also significantly improved over the last few years. Many companies have continued to grow their operations in Mexico to produce high value-added products such as automobiles, planes and medical devices.
“We expect this trend to continue developing in the medium and long term. A long period of increased economic and political stability has also allowed the government to concentrate its efforts on long-awaited reforms. We expect the implementation of important reforms to continue in the near future, which should have a more immediate impact on government finances and could improve GDP growth in the long run”.