Morgan Stanley is increasing its investments in Latin America as geopolitical conflicts In other parts of the world they give the region an increasingly greater role in the world economy.
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Wars in Europe and the Middle East, and rising tensions in Asia highlight the importance of Latin America “to reorganize supply chains and access everything from food and industrial metals to transition fuels and pharmaceutical ingredients,” John Moore, who heads the Latin America region for Morgan Stanley, said in an interview.
Citing the trends of “deglobalization” around the world, Moore said the bank has “We have steadily increased our investment in Brazil, Mexico and other Latin American geographies, a trend that we hope will continue. I continued“ with incremental increases in personnel and capital.
Morgan Stanley, which also has offices in Argentina, Chile and Colombia, sees growth opportunities for the investment banking business in mergers and acquisitions advisory, capital markets underwriting, sales and trading, and private credit, he said. The company, based in New York, has about 400 people who serve Latin American clients in these businesses.
The company, one of the five largest wealth managers for wealthy people in the region, increased assets in that business by about 6% last year, to about $120 billion. Still, Latin America is not immune to volatility.
“Obviously, there are headwinds in macroeconomic terms due to rates and political transitions throughout the region and around the world, while Mexico and Brazil have underperformed the US markets so far this year,” Moore said.
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Claudia Sheinbaum, elected president of Mexico EFE
The elected president of Mexico, Claudia Sheinbaum, brings a share of uncertainty to investors. He was widely expected to win and give Mexico a more market-friendly stance. But the ruling coalition’s near-super memory in Congress surprised investors, who fear lawmakers will approve constitutional reforms that could erode checks on power and put pressure on the budget. The peso has lost almost 8% against the dollar so far this year.
“For me, there is an abundance and variety of opportunities in Mexico, such as increased foreign direct investment flows and remittances that support the peso, cross-border mergers and acquisitions, and hedging and derivatives associated with underwriting“Moore said.
“We recently consulted with clients who had plans for Mexico, and they are still on track after the election results.” Morgan Stanley was one of the underwriters in the US$677.4 million initial public offering of BBB Foods Inc, the operator of a discount retailer in Mexico, which went public in February in the US. The company, a holding company that It carries out its activity through its main subsidiary, Tiendas 3B, and raised its price range during the operation, which was oversubscribed by more than 10 times.
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The investment bank also participated in the transaction of the Peruvian health services company Auna SA, and is among the underwriters announced for an expected IPO of Grupo Aeroméxico SAB, the Mexican airline that emerged from bankruptcy protection more than two years ago. years.
Morgan Stanley Tactical Value, which makes long-term and likely illiquid private investments, was one of the investors in a $100 million financing round from Mexican payments company Clip, announced this week. The volume of stock offerings by Latin American companies has increased 34% so far this year, to US$3.64 billion, according to data compiled by Bloomberg.
Rio de Janeiro iStock
In Brazil, fiscal concerns have also put pressure on the real, which has lost more than 10% of its value so far this year. But Foreigners are still interested in investing there, given the large number of e-commerce companies and fintechs, as well as “huge ESG opportunities” in renewable energy, Moore said.
These include second-generation ethanol for aviation from sugar cane biomass, as well as the development of local infrastructure. The war in Ukraine has also put a spotlight on Brazil’s energy and food exports that can be supplied to Europe, he said.
In Argentina, if the Government is able to implement fiscal and tax reforms, “there will also be more activity and investment by Morgan Stanley,” Moore explained. I praise the reduction in inflation, the tax cuts and the privatization plans that are underway. In Peru, Colombia and Chile, the idea is to “continue serving clients through our institutional and property businesses.”
With volatility high and interest rates expected to remain higher for longer than expected, structured credit can help clients reduce financing costs, Moore said.
The integrated bank can also offer solutions for currency, rates and commodity exposures. Morgan Stanley was one of the banks that benefited from the merger between Credit Suisse and UBS Group AG, as wealthy clients with accounts at both Zurich-based banks sought diversification from the competition.
Separately, Morgan Stanley lost some advisers amid a regulatory review in recent years focused on whether the wealth management business was taking appropriate steps to prevent money laundering by wealthy non-U.S. clients. Morgan Stanley, which serves wealthy Latin Americans from its wealth management centers in New York and Miami, plans to continue expanding that business after the unit doubled its revenue in the last seven years, Moore reported.
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