Latin America – 2019 In Review

From a political and economic standpoint, 2019 was a challenging and interesting year for the Latin American region, but the region still finished strong. The S&P Latin America 40, Latin America’s blue-chip index, ended Q4 with a return of 9.0%, and it was up 13.9% for the year. Small-cap stocks in the region fared well, helping the broad S&P Latin America BMI return 11.1% for the quarter and nearly 22% for the year. Despite the strong performance, Latin American indices still lagged some of the global equity indices. The S&P 500® returned 9.1% for the quarter and an outstanding 31.5% for the year. The S&P Global 1200 yielded 8.9% for the quarter and 28% for the year. The S&P Emerging BMI also had a great year (up 19.9%), but still underperformed Latin America (as measured by the S&P Latin America BMI).

In 2019, all 11 GICS® sectors for Latin America posted positive returns, as measured by the S&P Latin America BMI Sector Indices. Some sectors yielded considerable returns; Health Care gained 22.0% for the quarter and was up 72.2% for the year. Information Technology and Real Estate were next, yielding 43.5% and 42.3% for the year, respectively. Materials had a strong quarter, returning 16%, which helped to bring the sector into positive territory for the year, ending with a mere 4.4%—the lowest annual return of the sectors.

Besides sectors, it is clear that Brazil’s positive performance was a big contributor to the overall performance of the region. Brazil not only had a stellar quarter with the local benchmarks, as the IBrX 100 and the S&P Brazil BMI both yielded around 11%, but the country also had a banner year, providing returns in the mid-30% range in local currency terms.

With the growing trend of factor indices in Brazil, we see that most did well for the year, and in most cases, returns were above 40% in local currency and USD. However, the risk data was also high, particularly for the USD-denominated indices. Local investors took on less risk when removing the currency exchange rate from the performance calculation.

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