Wealth Outlook 2024 - Slow then grow

123 Wealth Outlook 2024 | Regional outlook Latin America: potential opportunities amidst low valuations likely to be a dominant component in EV batteries and battery energy storage systems for the foreseeable future. With Chile and Peru first and second among the world’s largest copper producing nations, respectively, and Chile second in lithium, these are trends that could benefit the region for years. Lastly, there’s Argentina: As part of a broad-based agenda aimed at reversing decades of economic crisis, newly elected president Javier Milei has proposed a raft of radically Libertarian reforms, including abolishing the Argentine central bank, fully dollarizing the economy and cutting government spending by 15%. Whatever the previous mismanagement and human hardship that led Argentina to this point, it’s hard to imagine how, as a practical matter, Milei’s methods can be implemented without large sacrifices and more pain for the Argentine economy and its markets. Milei’s diagnosis of Argentina’s illness seems to be accurate. His prescription is shock therapy. The question now is whether the policies will be implemented and at what cost. Equities Emerging markets (EM) equities are cyclical, highly dependent on global financial conditions and risk appetites – all of which remain unsettled as we enter the new year. That said, valuations in Latin America have become attractive. As of November 23, 2023, consensus 2024 earnings per share for the MSCI Latin America index was around $285, representing a forward price-to-earnings (PE) ratio of about 8 – a level ~1.5 standard deviations below its long-term average ( FIGURE S 2 -3 ). FIGURE 2 Even compared to a performance history prone to global risk- off sentiment, today’s Latin American equity valuations look attractive LATAM MSCI EOP Price (Index level) LATAM MSCI earning per share (USD) 2000 2005 2010 2015 2020 2025 0 400 200 0 2500 5000 Source: Bloomberg, Citi Global Wealth Office of the Chief Investment Strategist (“OCIS”) as of November 16, 2023; All forecasts are expressions of opinion and are subject to change without notice and are not intended to be a guarantee of future events. Indices are unmanaged. An investor cannot invest directly in an index. They are shown for illustrative purposes only and do not represent the performance of any specific investment. Index returns do not include any expenses, fees or sales charges, which would lower performance. Past performance is no guarantee of future returns. Real results may vary.