INTERNATIONAL confidence in Latin America received a knock last year as the region was hit by shockwaves from the Asian economic crisis, and Edinburgh Inca Trust suffered accordingly.
The #29.9m investment trust lost 14% of its net asset value during the six months to March 31, as stock markets from Mexico City to Buenos Aires crashed.
But the crisis bottomed out in January, since when overseas investors have started to cautiously rebuild their investments in Latin America, whose economic fundamentals remain sound - despite problems in Mexico caused by low oil prices and the knock-on effect of low copper prices in Chile.
Despite its disappointing performance, Edinburgh Inca managed to stay ahead of its benchmark during the first half by concentrating on blue-chip companies in the region's four main markets - Argentina, Brazil, Chile and Mexico.
The trust shifted its assets away from the smaller and less liquid stock markets in Peru, Venezuela and Colombia and lightened its position in smaller companies following a change in its mandate in December 1997.
This change in tack enabled Edinburgh Inca to stay ahead of the IFC Latin American Investibles Index, which fell 16.6% in sterling terms during the six-month period.
The trust said a recovery in Latin American share prices would depend in the short term on a return of US mutual funds in the region.
But its investment decisions could well be determined more by conditions in the US market than by economic fundamentals south of the Rio Grande, it noted.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article