After A 73% Collapse, Latin American Stocks Finally Start to Soar

For the last decade investors in Latin American stocks watched stock portfolios wither away. However, since 2008 the markets are showing signs of life again. The spark is the same today as it was then: a boom in global demand for the region’s exports of oil, copper, soybeans, corn and iron ore. Combined with Russia’s invasion of Ukraine has only furthered global supplies of key commodities.

The MSCI’s regional index has jumped 26% in the first quarter of 2022 and is the best start to a year since the early 1990s. The returns are even more impressive when compared to the US stock market and Western Europe. Perhaps it is payback for the losses Latin American’s felt whilst stocks across the rest of the world soared. Pablo Riveroll, the head of Latin American equities at Schroders said that he is feeling positive about the region as the gains are coming from across the region. [1]

Source: Bloomberg

Globant Welcomes Endeavor, LAVCA, and Newlab as Partners of Its BeKind Tech Fund

Globant announced its new fund, BeKindTech. Fund which is its first and only venture fund focused on supporting start-ups that seek to tackle the misuse of technology. It welcomes three new entrepreneurial ecosystem partners, Endeavor, LAVCA and Newlab. The central tenet of the fund is a belief in the power of collective action and these partners will work together to promote the fund and help reach the thousands of next generation entrepreneurs, start-ups and dreamers tackling technology misuse.

The BeKindTech Fund has five main focus areas which are online harassment and abuse, data privacy and security, AI bias, screen time abuse, information bubbles and polarization. Globant launched the $10m fund because they believe that technology is inherently good, and when applied correctly it has the potential to improve our lives, communities and our planet.

The partnerships share the same beliefs, goals and visions for technology which will increase the Fund’s reach and scale of impact. Guibert Englebienne, Globant Co-Founder and President of Latam and Globant X said that “through this partnership, we’re co-creating a movement to invest in positive technological change and hope to inspire other companies to join us. Together, we’ll be able to connect with tens of thousands of entrepreneurs and startups to invest in the highest-quality, most ambitious startups with the potential to maximize technology’s positive influence.” [2]

How has the Russia-Ukraine War Devastated Ecuador's Banana Industry?

Until recently the bustle of Ecuador’s banana plantations provided evidence of the industry’s strong export business as it is the largest banana exporter in the world. However, since Russia invaded Ukraine, the groves have gone silent as the effects of the war are being felt half a world away. With nowhere to send them now, containers are full of rotting fruit not far from where they were originally harvested.

Franklin Torres, president of Ecuador’s FENABE (banana producers federation) stated that 1 in 5 bananas produced in Ecuador go to Ukraine and Russia. The vast majority of that portion goes to Russia, where banana sales are worth $698 million a year. Russia usually sends almost two million boxes of bananas a week to the eastern European neighbours, but due to international transport sanctions over its invasion of Ukraine, Russia is not receiving its cargos of bananas.

“The banana producers are finished, I have not processed a single box for three weeks,” said Mireya Carrera, 62, the owner of the Thalia banana plantation. “The staff are leaving on their own without being fired because I cannot pay them. “She used to fill three containers with 3,000 20-kilogram (43-pound) boxes of bananas from her 28-hectare plantation. “Now I have 7,000 bunches with no buyer,” she told AFP. [3]

Source: Statista, BizLatin Hub

Venezuela: Ideology Doesn’t Pay the Bills

Oil’s relevance in the world economy endures along with Chavismo. Russia’s invasion of Ukraine has reminded many that the largest oil reserves in the old are in a country that is geographically near the United States: Venezuela. In oil tanker terms, the shipping time from Venezuela to the US is less than a week, whereas a tanker from Russia can take 2 to 3 times as long.

Due to the above factors, some have argued that now might be the time to negotiate with Maduro. This negotiation may entail in less sanctions, more oil and democracy. Venezuela would be placing itself in a better position if it were to foster a better relationship with the US, rather than with Russia whose economy is contracting and is likely to become isolated due to international sanctions. Countries have interests and the US and Venezuela may be coming together.

The question of whether Venezuela can make up for the shortfall of Russian oil, some argue that it can. In 2021 the US imported roughly 700kbpd of oil products from Russia. Venezuela’s oil export capacity in 2021 was between 500kbpd and 700kbpd. Additionally, it appears feasible that with a loosening of sanctions Venezuela could increase the number.

Whilst this will not solve the oil issue it may help. Notwithstanding the fact that it has the potential to remove Russia as an ally from Venezuela too. [4]

Mexico’s Border Bonanza Shows U.S. Importers Looking Outside China

Mexico’s economy struggled into 2022. However, factory filled states along the US border are thriving as the country’s exports surpass $80 billion in the first two months of 2022. Strong US demand and the revival of the auto sector has investors moving in and banks preparing to finance new projects. Exports for non-petroleum goods grew almost 27% in February compared to the year earlier.

Monterrey based Groupo Financiero BASE is one of the largest exporters along the border and they expect exports to grow another 6% in 2022. They provide half of its lending in the state of Nuevo Leon bordering Texas and includes amongst its clients everyone from orange growers to budget mobile phone makers.

“It’s a year of big opportunities,” Julio Escandon, BASE’s chief executive officer, said in a recent interview. “Because of the pandemic and probably the situation in Ukraine, the supply chain that comes from Asia is moving to Mexico.” [5]

Source: Instituto Nacional de Estadistica, Geografía e Informatica Note: Preliminary statistics in U.S. dollars

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