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Latin American stock markets are outperforming nearly every major benchmark in 2026 despite trade tensions. Trump's foreign policy in the region has included a military operation to seize Venezuela's president, an oil blockade on Cuba, and threats toward Colombia and Mexico. Yet investors keep piling in.
Brazil's benchmark BVSP index has gained 21.7% since the start of 2026, Peru is up 18.8%, and Colombia up 10.6%. The S&P 500 has gained 3.9% over the same period.
The MSCI Emerging Markets Latin America Index soared 54.8% in 2025 and has already climbed another 23% in 2026.
Fund managers say the geopolitical events haven't created systemic regional risk. Romain Bordenave of Edmond de Rothschild Asset Management described Venezuela as a "highly isolated EM story" with limited spillover to regional assets.
The US military operation there actually galvanized investment, with Venezuelan stocks surging to record highs on hopes of economic reform.
The broader case rests on valuations. Investors pay just over $9 for each dollar of earnings across Latin America, compared with more than $19 for developed markets. Brazil trades at 8.5 times price-to-earnings, roughly one standard deviation below its own historical average, according to Morgan Stanley.
Brookfield Renewable, Vestas Wind Systems, and Petrobras stand to benefit as Latin America accelerates renewable investment.
Brookfield owns one of the region's largest clean power portfolios, Vestas supplies wind turbines across key markets, and Petrobras' power generation assets could gain value as Brazil expands its renewable electricity mix.
The Latin America currency index recently touched a 14-year high. Brazil's real is up 9% against the dollar in 2025, supported by a benchmark interest rate of 14.75% that makes it one of the world's most attractive carry currencies. The Argentine peso gained 4% over three recent months, and the Colombian peso rose 2.5% versus the dollar.
Morgan Stanley maintains an overweight rating on Brazilian equities. The bank expects lower inflation and a slowing late-cycle economy to support rate cuts, which it sees as critical for reducing fiscal dominance risk.
Mexico trades 0.7 standard deviations below its historical average and is showing early signs of investment recovery, particularly in IT hardware.
"The Latam story is easier to tell now as stocks are cheap and there is a lack of options in emerging markets."
Leonard Linnet, Itau BBA
Argentina represents a newer layer of the story. After capital controls were lifted in mid-April, investors who previously couldn't access the market are now doing due diligence. Argentina's dollar debt has returned over 100% at the index level since President Milei was elected in late 2023.
The investment infrastructure underpinning all of this is also changing fast. Brazil's locally listed ETF assets have nearly tripled in two years to roughly $22.8B. Total ETF assets across the country rose over 40% in 2026 alone.
Fixed-income ETFs have attracted over ~$5.3B (27B reais) in new cash in Brazil this year. They're popular partly because they're exempt from a tax prepayment system that applies to many traditional fixed-income funds. Colombia saw ETF listings rise 24% year-over-year, and Chile saw listings jump 37%.
Mexico's pension funds, known as Afores, are increasingly using ETFs to access overseas equity markets. Principal Afore, which oversees nearly $26B in assets, described ETFs as transparent, efficient, and cost-effective for accessing geographies where direct exposure is otherwise limited.
