Reforms drive the Latin America rally

Voters in Latin America are choosing right-of-centre governments in the hopes of improving economic conditions in their respective countries. With falling US rates, a weaker dollar, and signs of a new commodities upswing, these changes suggest that last year’s rally in Latin American equities could see a durable re-rating. A more conservative economic approach may allow high real rates of interest to fall, boosting growth and, as a result, equity market performance. Lower interest rates can create non-inflationary growth and market confidence, allowing currencies to strengthen further against...