Latin America is master of its markets, not Trump, Bradesco says

The outlook for Latin American shares depends more on local elections and fiscal and monetary policy than it does Donald Trump’s tariff war, according to Ben Laidler, Bradesco BBI’s head of equity strategy.

“Whether you make or lose money in Latam this year is basically dependent on what happens in Latam,” said Laidler in an interview in São Paulo. “The rest of the world is important, but it’s much more about fiscal policy in Brazil, the reform agenda in Argentina and the elections that are coming in Chile.” 

The region’s equities have rallied this year despite Trump’s escalating trade war stoking volatility and undermining US stocks. The MSCI EM Latin America Index is up 16 percent so far in 2025, compared with a 7.5-percent drop in the S&P 500.

Equity markets across South America offer attractive valuations and cheap currencies, which present opportunities for investors looking away from the US, Laidler said. The MSCI Latam stock index trades at about 8.77 times estimated earnings, compared with 11.57 for the MSCI gauge of EM stocks and 19.26 for the S&P 500.

“If this is a growth scare, which is our view, then this is an investment opportunity and the global rotation out of the US into the rest of the world is just beginning,” Laidler said.

The outcome of this year’s presidential election in Chile is a main focus for investors in the South American nation. Money managers have started to bet on a political shift away from the left as polls for the November first round vote show centre-right candidate Evelyn Matthei as a front-runner.

Meanwhile, Laidler said he’s positive on Argentina’s reform agenda as it could unlock a multi-year upside for the equity market. The latest International Monetary Fund deal and the lifting of capital controls also mark a “big step forward,” said Laidler, adding that Argentina is Bradesco BBI’s top regional country pick.

For Brazil, the triggers will be next year’s presidential elections and the central bank’s easing cycle, which is predicted to start by the end of this year. Traders are already making moves ahead of the 2026 vote, Laidler said. He has been adding risk to his Latin American model portfolio, such as state-controlled companies including Petrobras and Banco do Brasil, as well as financial stocks like BTG Pactual, XP Inc. and B3 that stand to benefit from increased capital market activity.

“Rates are going to be cut, the election is happening and it’s a locally driven self-help market,” Laidler said. “If anything other than the worst risk off environment globally happens, those local self-help drivers will dominate.”