Despite not having such developed economies, Latin America has renowned companies that continue to expand. One of the main challenges is, of course, to impact the US market and this is reflected in the performance of these companies in the stock market.
2022 was a tough year for stocks on the market, yet 8 of the 10 companies on the list have performed positively.
The first thing that attracts attention is the preponderance of Brazilian companies. With 6 Carioca companies on the list, 4 of the first 5 are from Brazil. The other countries have only one company each (these are: Argentina, Mexico, Colombia and Chile). There is also no great concentration by sectors, but diversity is observed: Energy, Communications, Financial, Basic Materials and Consumption.
This is the ranking:
- Vale S.A (VALE) (Brazil): The multinational founded in 1942 is dedicated to mining, energy and logistics, being the second largest mining company in the world and the largest producer of iron. It has a Market Cap of USD 93,000M.
- Petrobras (NYSE: PBR) (Brazil): This semi-public oil company, founded in 1953, is recognized for its operations in the oil and hydrocarbon market. It has a Market Cap of 85,000M.
- América Móvil (BMV: AMXL) (AMX) (México): This multinational founded in 2000 is dedicated to telecommunications, and has advanced to become the seventh most important in the world. It has a Market Cap of USD 67,000M.
- Banco Itaú (ITUB) (Brazil): A financial institution founded in 1945, it has a presence in Latin America, Europe and Asia, with an average of more than 17 million customers. It has a Market Cap of 48,000M.
- Ambev S.A (ABEV) (Brazil): This subsidiary of the Belgian multinational Anheuser-Busch InBev (EBR: ABI) operates in the brewery business, with products such as Corona, Brahma and Stella Artois. It has a Market Cap of USD 46,000M.
- Mercado Libre (MELI) (Argentina): Veteran e-commerce company, founded in 1999 by Marcos Galperín with a presence throughout Latin America, presence in Fintech and payments. It has a Market Cap of USD 43,000M.
- Banco Bradesco (SA: BBDC3) (BBD) (Brazil): Founded in 1943, it is the second-largest bank in the country. It has a Market Cap of USD 41,000M.
- Ecopetrol (CN: ECO) (EC) (Colombia): Founded in 1951, it is dedicated to oil and is the second-largest oil company in Latin America. It has a Market Cap of USD 35,000M.
- Chemical and Mining Society of Chile (SQM) (Chile): The company was founded in 1968 and is dedicated to the exploitation and commercialization of iodine, potassium and lithium. It has a Market Cap of USD 30,000M.
- Banco Santander (BME: SAN) Brazil (BSBR) (Brazil): A banking institution founded in 1982, it is a subsidiary of Banco Santander, one of the largest financial groups in the world. It has a Market Cap of USD 25,000M.
It is quite striking that even though the S&P, the Nasdaq and the Dow Jones accumulates a fall from 13%, 23% and 9%, respectively, we see that 8 of these companies have positive performance, leading the ranking of the Chemical and Mining Society of Chile, with a yield that exceeds 100%, thanks mainly to the fact that lithium sales increased 10-fold in the first quarter of the year.
We see that the Brazilian companies (Banco Itaú, Vale, Petrobras, Banco Santander, Ambev) and Ecopetrol (Colombia) also present positive returns.
On the part of the banking sector, we noted that the Brazilian banking sector benefited from the increase in the rates of its central bank (Banco Central do Brasil) which reached the level of 13.25%, the highest since January 2017. The oil companies Vale, Petrobras and Ecopetrol effectively took advantage of the rise in the price of their products, which in the last 12 months and according to OPEC have increased by 47.42% (also influenced by Russia’s invasion of Ukraine, among other factors). Ambev saw an increase in its sales of 30% compared to the previous year, driven by the growing consumer demand in the region.
On the side of negative performance, we have two companies. The Mexican telephone América Móvil falls by 3.5% so far this year; this sector in general has undergone a major correction in which the company has certainly not been unaffected.
To finish, the most negative performance is experienced by Free Market, the Argentine e-commerce company presents a 35% drop in its value. The rise in rates changed the whole context, mainly affecting technology companies. Although previously, before its spectacular fall, Free Market was the most important company in Latin America, with a high valuation, the market had no mercy on it.
The Latin American stock market is one of the few investment categories that have given positive returns in 2022, with a majority of companies in the region achieving positive returns despite the instability and characteristics of Latin American countries and the impact of the sharp rise in interest rates that the United States has undertaken, traditionally, when the US Treasury starts paying investors more for its bonds, there is a flow of money out of emerging countries to buy dollars and invest in US debt, which generally has a negative impact on local currencies and listed companies.
Undoubtedly, there are and still are several very interesting companies to take into account and in sight for investment, especially Brazilian companies, which stand out for the variety and robustness that they have presented in the current context, with the impressive revaluation of their currency, the Brazilian real, which for the first time in many years competes very notably against the euro, due to the highest interest rates in the region and the inflow of flows to invest in raw materials, making Brazil stand out as one of the most interesting emerging economies for investment in the US stock market.