By Shuli Ren
Even though the currencies in Latin America have fallen significantly last year, they may suffer some more, said Capital Economics, a London-based research firm.
Capital Economics forecast that the Brazilian real will fall from 2.37 to 2.5 against the dollar by year-end, Colombian sol from 1,986 to 2,000; Peruvian sol from 2.35 to 2.95; and Chilean peso from 542 to 550.
Here is Capital Economics justifying their forecasts:
This is due in part to concerns surrounding the Fed’s withdrawal of stimulus, falling commodity prices and weaker economic growth in the region. These factors are likely to weigh on risk appetite and capital inflows.
These countries’ equity markets are not expected to perform either. Brazil, Colombia and Chile are expected to remain flat, and Peru is forecast to slump from 16,380 to 14,175.
Mexico is the only bright star. The peso is forecast to appreciate from 13.3 to 12, and the equity market from 42,062 to 42,900.
If Capital Economics were right, we could be expecting a 20%+ return in dollars from Mexico this year. And Peru would be the weakest link, potentially posting a 30%+ loss.
This morning, the iShares MSCI Mexico Capped ETF (EWW) lost 1.6%, the iShares MSCI Brazil Capped ETF (EWZ) lost 2.4%, the iShares MSCI Chile Capped ETF (ECH) lost 2.1%, and the iShares MSCI Peru Capped ETF (EPU) lost 0.2%
No comments:
Post a Comment