Why Latin America’s equities are capturing global attention
Key takeaways
• Latin America's equities are drawing global interest with strong outperformance, driven by attractive valuations, favorable market policies, and rising demand for AI-related commodities.
• Investor enthusiasm is bolstered by near-shoring, US trade strategies, and energy investments like Argentina's Vaca Muerta shale.
• Despite recent growth, sustained performance is likely, supported by ongoing geopolitical shifts and significant investment in global AI infrastructure and supply chain realignment.
Attractive valuations and shifting regional dynamics are prompting international investors to pay closer attention to Latin America’s equity markets.
Latin America’s equity markets were among the best performing in the world in 2025. The MSCI EM Latin America index posted gross US dollar returns of 56% in the year, and then 15% in the first three months of 2026.
This performance put the region well ahead of MSCI’s broader emerging market or global indices, which returned 30% and 20.5%, respectively, in 2025, and then fell slightly in the first quarter of 2026.
“Latin America stands out within a generalized trend that we saw all through last year, which is that investors started to diversify away from the US,” said Mauricio Santos, CFA, Director of Investment Portfolios at Grupo Bursatil Mexicano (GBM). “This rebalancing benefits emerging markets, and Latin America in particular.”
Brazil accounted for 61% of the Latin America index at the end of March 2026, Mexico 25%, with single-digit percentages from Chile, Peru and Colombia. And Brazil is the largest market in the region, with a market cap of about USD1 trillion, with Mexico at USD690 billion.
Despite the surge over the last year, many analysts and professionals in the region see a continued strong outlook. In a February 2026 podcast, Morgan Stanley Chief Latin America Equity Strategist Nikolaj Lippmann argued that the region was approaching a “Spring” moment that could herald a new growth cycle.
Attractive valuations even after rise
One driver of Latin America’s equity market performance in 2025 is the region’s persistently lower valuation compared to others, particularly the US. Analysts note that this dynamic has persisted into 2026 too.
“Even after the strong performance in 2025, valuations are still attractive relative to other regions,” said Pedro Fabregat, CFA, Analyst at INCA Investments. As of March 31, 2026, the MSCI Latin America index was at a trailing price-earnings multiple of 12.3 times, a discount of 43% to the global index.
Another driver for the region has been a broad move towards more market-friendly policies in recent years, which experts say gives confidence to investors.
“The broader community of investors often sees emerging markets as chaotic, and that has traditionally also been the case for Latin America,” said Franco Di Nicola, CFA, Portfolio Manager at Bishop Capital and Professor of Finance at Instituto Tecnológico de Buenos Aires (ITBA). “But when you see structural changes, like the more market-friendly government today in Argentina, and better functioning institutions, that is the fuel for markets to start climbing.”
Near-shoring and trade
A multi-polar dynamic that is reshoring supply chains to Western hemisphere producers is another continuing driver for market performance. The global trade landscape is being reshaped by US policy, which is expected to benefit Latin America.
According to BCG, the value of total trade in Mexico could rise 50% between 2023 and 2033 as a result, to USD1.5 trillion. For the member countries of South American trading bloc Mercosur – Argentina, Brazil, Paraguay, Uruguay and Bolivia – the rise could be 43%, to USD938 billion.
“The geopolitical shift is not just about Trump, it is about the US determining that Latin America needs to be in the same market as North America,” said Juan M Veron, CFA, Managing Partner at Inception Capital. “The sectors that will thrive are those related to the new geopolitical landscape of near-shoring and friendshoring, like capital goods.”
As well as buying those sectors directly, an alternative way to invest in that trend is through the region’s listed real estate or infrastructure trust structures, such as FIBRAs in Mexico, which were worth about USD50 billion at the end of 2025. The S&P/BMV FIBRAs index rose 30% in 2025 as demand soared for industrial properties such as warehouses and logistics hubs.
Playing the AI super-cycle
Other global trends are also playing out in the region and helping to push markets, notably the artificial intelligence (AI) super-cycle, with its demand for materials like lithium and copper. These are both abundant in Latin America, particularly in Chile and Peru, and are needed for the estimated USD3 trillion investment in global data center infrastructure investment that might transpire between 2026 and 2030.
“Commodities were a big part of the fuel behind the rally in Latin American equity markets in 2025,” said Fabregat. “The AI cycle across the world, and the investment in data centers that drives demand for copper and lithium, could continue.”
Investment in local Latin American data centers is still largely limited to private markets, but Brazil’s Fundos de Investimento Imobiliário (FIIs) – its equivalent of Mexico’s FIBRAs – are increasingly expected to be one public way to participate.
One such FII, Alianza Trust Renda Imobiliária, already offers exposure to data centers, and others are planning to do so. The Brazilian government is putting in place incentives to support data centers, including tax breaks through its Redata program.
All roads lead to energy
An ever-increasing global focus on energy supply is expected to be another driver of the region’s markets, benefiting companies in all areas of the energy sector. Latin America is a net exporter of crude oil, a position that gives it strength given current global geopolitics.
And new developments can change the dynamics for a country’s entire economy. Exploiting Argentina’s Vaca Muerta shale formation is now a priority for the government, for example, after favorable policies introduced under President Javier Milei.
“When you consider the geopolitical tensions in the Middle East and also the AI revolution, all roads lead to energy,” said Di Nicola. “A lot of investors see Vaca Muerta as a new opportunity for Argentina to complement its agricultural economy.”
The energy sector is also an example of the resilience of Latin American equity markets to some of the risks posed by widespread AI adoption.
“Latin American markets are anchored in so-called HALO sectors – heavy assets, low obsolescence – and so are less likely to be disrupted by AI,” said Santos, who noted that well-performing stocks included infrastructure names in Mexico and utilities in Brazil. “There is a bid now for real assets, and there are plenty of those in Latin America.”
Global macroeconomic conditions are expected to remain challenging in the near-term, but investment professionals in the region agree that if Latin America remains on its current trajectory, the tailwinds for equities look set to continue.
According to Veron, there is a strong case for Latin America simply making up lost ground.
“In the decade to 2024, US exceptionalism was so high that many sovereign wealth funds removed emerging markets altogether,” he said. “Today Latin America not only fits the local-to-local approach, but it is hugely under-owned throughout the world.”
To learn more about Latin America investment trends, explore these stories:
How private credit investment is filling a funding gap in Latin America
Liquid assets: Why Latin America is embracing investments in water
Family offices in Latin America: From wealth preservation to wealth strategy
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