After a stellar rise from March’s lows, financial markets across Latin America have wobbled over the past week amid fears that a number of countries might follow Brazil’s lead and impose controls on capital inflows. High levels of global liquidity combined with the region’s comparatively good growth prospects mean that renewed gains in financial markets are likely in the near-term. But equity valuations are looking stretched in a number of countries (Peru) and some currencies (notably the Brazilian real) now appear overvalued compared to fundamentals. With the pace of economic recovery likely to fade over the second half of next year, and commodity prices and global risk appetite set to fall too, there is a good chance that asset prices will end 2010 lower than they start it.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to gain:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services