3 Big Reasons to Reconsider Latin America
  • Speaker Detail
    • Heiner Skaliks

      Heiner Skaliks is the portfolio manager of the Strategic Latin America Fund (SLATX) and CEO of the advisor, Strategic Asset Managements, Ltd. He also spent three years at the International Finance Corporatioin (part of the World Bank Group) overseeing financial sector technical assistance projects in Latin America and the Caribbean. Between 2000-2003, Mr. Skaliks created and managed a mutual fund company. Prior to that, he was the CEO and portfolio manager of a Bolivian mutual fund, broker-dealer, and boutique investment bank. He started his career with Banco Mercantil SA in 1996, overseeing a diverse loan portfolio (from microcredit to corporate loans). Mr. Skaliks holds a BS in mechanical engineering and MBA with a concentration in finance, both from the University of Notre Dame and an MPA with a methodological area of concentration in macroeconomics and financial markets from Harvard University.

Released: 12/17/2012
Much of the region has rebounded from the turmoil of years past, and there are a number of positives to investing there now that people may not know about, explains Heiner Skaliks.
SPECIALTY: GLOBAL

Much of the region has rebounded from the turmoil of years past, and there are a number of positives to investing there now that people may not know about, explains Heiner Skaliks.

We’re here today with Heiner Skaliks, and we’re talking about Latin American investing. It’s kind of gotten lost in all of the European discussions and the slowing of China and all of these other things, but there is a really interesting story there that people are missing, don’t you think?

Indeed. I think Latin America has been overlooked for the last 20 or 30 years, and that probably is a consequence of the fact that at the time, Latin America was undergoing several different structural social and political reforms.

I always do refer to the three ghosts that plague Latin America, one of them being hyperinflation where rates used to hit as much as $25,000%. I remember I had to go spend my allowance that same day because by the time I got to the store, the price would change.

You also had political instability. Basically, we were going through a new president every other week, and depending on which country you were in and which Latin American region you were in, there was tremendous political instability.

You also had the foreign exchange rate volatility where a dinner for two could cost you $2 in a country and you went back to the same restaurant two months later and that same dinner cost you $200. So those are the three ghosts that I think plagued the region, and I think we have overcome them now.

Yeah, I remember back in the 80s that they used to write prices on chalkboards.

That’s right. That was an easy way to update them, and they started to update the dollar reference as well, wherein the prices were referred to in US dollars. It was better to just make the conversion right there and then, but you fixed the real price in US dollar terms.

What else do you see going on in Latin America that investors are missing?

The fact that we’re on the ground. The fact that we travel throughout the region in different countries. What we’ve seen is a more aggressive regional expansion on behalf of companies.

Rather than focusing on just the US market, what Latin American companies are doing is focusing on the countries that they underserved or focusing on portions of the population that they have not reached and aiming at that segment of the population. There are still significant underserved portions in financial services, for example. There is a tremendous housing deficit, a tremendous infrastructure deficit so the companies are starting to focus on these.

We ran some numbers based on correlation, and the markets between certain Latin American markets and the US market and some were as low as 0.1%, meaning that only one out of ten times whatever happens in the US will happen in the Latin American market. So that’s a very interesting correlation and diversification play for a portfolio. 

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