over 2 years ago • 1 min
Latin American stocks just keep getting cheaper, with the region’s shares now offering the lowest valuation compared to the rest of the world since 2007.
The chart above plots the price-to-earnings ratio for MSCI’s Latin America Index compared with the same ratio for the MSCI All-Country World Index of global stocks. A declining line means Latin American stocks are getting cheaper compared to those elsewhere. The ratio dropped to 0.48 last week, well below the long-term average of 0.83.
Investors are shunning stocks in Latin America – an economy dominated by mining and industrial metals – even while they bid up the price of those metals. The chart below shows how the ratio of Latin America stocks to the MSCI All-Country World (plotted in pink) has tended to track the price of copper (in blue) over the past decade – until the relationship broke down last year.
Those willing to bet that Latam stocks will eventually rebound back toward their long-term average could try the iShares MSCI EM Latin America exchange-trade fund (ticker: LTAM), which tracks MSCI’s Latin America Index.
Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.