Latin American markets are experiencing bullish movements today. But what’s behind this rise, which includes countries like Brazil, Colombia, or Mexic
Latin American markets are experiencing bullish movements today. But what’s behind this rise, which includes countries like Brazil, Colombia, or Mexico? The answer lies on the other side of the Pacific.
The recovery of the Chinese market, the main trading partner and destination for exports of many countries in the Latin American region. The CSI300, the main index of mainland China, has risen by over 3.5% overnight, driving up assets related to Latin America and other emerging markets.
Additionally, China has the greatest weighting in the ETF with the largest assets under management dedicated to tracking emerging markets. The iShares Emerging Index Fund (EEM) also includes other high-weighted countries such as India.
In other words, it’s important to recognize that there is a direct relationship among emerging markets. Particularly, there is a correlation between the prices of those assets whose exports depend on China. A clear example of this is the iron ore Brazilian company Companhia Vale do Rio Doce, better known as VALE, whose price depends on China’s activity and GDP, where it exports 65% of its production.
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