Wealth Outlook 2024 - Slow then grow

125 Wealth Outlook 2024 | Regional outlook Latin America: potential opportunities amidst low valuations around 4.5% in nominal terms, regional credit spreads of between 200-300 basis points represent a potential opportunity for fixed income investors to lock in medium-duration exposure in selective names and sectors. Currencies Most Latin American currencies are set to end 2023 on a high note. As of November 23, 2023, the Brazilian real and Mexican and Colombian pesos managed to maintain gains, up 7.81%, 13.93% and 20.96% YTD against the greenback, respectively. But the Chilean peso has begun to struggle and is down 3.47% year to date, while the Peruvian sol is gaining slightly 1.97%. We do not see a fundamental reason why any of these free-floating currencies would overshoot, and so will view extreme trading levels as potential opportunities to take local bond exposure or actively manage currency hedging. The currency that appears most overvalued is the Mexican peso due to the sharp inflow of near-shoring investment. The Mexican peso traded as high as 16.62 to the USD before depreciating to above 18.00. We would view the 19.00 area as much closer to fair value but also fully recognize that the strong near-shoring flows could keep this currency relatively overvalued for some time to come.