Trust looks to Brazil’s key players off the pitch to boost its success
A ALL eyes will be on Brazil from Thursday, when the W World Cup ki kicks off in Sao Pau Paulo. Among those with a ticket tick for the opener b between the h host country and Croatia will be Will Landers, manager of the BlackRock Latin American Investment Trust.
Brazilian-born Landers is a big supporter of the team and the country’s stock market – 63 per cent of his fund is invested there. The next biggest slice is in Mexico at 26 per cent, with Peru, Chile and Colombia making up the rest.
Over the past three years, the trust has disappointed, generating losses of 23 per cent. But Landers says: ‘Brazil is Latin America’s biggest and most liquid stock market and despite the recovery in valuations, it is still one of the cheapest markets in the world.’
Brazil may be tipped to win the World Cup, but the tournament is unlikely to stimulate economic growth. Landers, who witnessed an absence of excitement about the contest when he was in Brazil last month, says: ‘The lack of economic growth and negative feelings about the money spent on the competition has affected the atmosphere, though once the cup starts that will probably change.’
More influential will be October’s general election. If the opposition beats the incumbent centre-left party, observers expect significant adjustments in the economy, including sharp rises in interest rates to beat inflation.
Landers likes Brazil’s banks and insurers, which make up nearly a third of his trust, and some commodity players such as Vale, the world’s biggest iron ore producer, ‘which is well managed and has improved transparency’.
An interesting ‘bet’, he says, is schools-to-textbook group Kroton, which is merging with higher education firm Anhanguera to build a giant educational business with a million student customers.
He says: ‘The middle classes are working harder at getting qualifications and the Government is helping finance them to do it.’
Another favourite is beer maker Ambev, which had a good summer and should prosper during both the World Cup and the elections.
Landers says: ‘The only concern is talk of increased beer taxes.’
Tim Cockerill of Bristol-based investment adviser Rowan Dartington, says: ‘This trust provides broad exposure to Latin America from a quality fund management group. It would be my recommendation if someone liked this sector.’