Buenos Aires strives to become a leading financial hub; Japanese investors are drawn to Brazil's investment roller coaster; and tweets from President Trump influence policy at Mexico's central bank.
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Argentine President Mauricio Macri is looking to position the capital city of Buenos Aires as one of the world's leading financial hubs, "the New York of the southern hemisphere," John Authers reports for the Financial Times. Buenos Aires ought to be an "obvious base" for global banks and investment firms given the city's "impressive supply of well-educated labor" and other benefits, but "generations of mismanagement have taken their toll" on infrastructure and the quality of life, Authers writes. Macri is now attempting to convince foreign investors that Argentina offers solid growth prospects, "particularly with a government that wants to help." While international sentiment is slowly turning in Buenos Aires' favor, investors still seem worried about Argentina's penchant for messy politics, especially with upcoming parliamentary elections scheduled for October. This leads Authers to say that "not for the first time, politics could be the Achilles heel of Buenos Aires' bid to attract investment."
As Brazil continues to struggle with political and economic issues, some investors remain wary of any exposure to the country, but Japanese investors, who face negative yields at home, believe the risk is worth it, Bloomberg News reports. "Brazil is back on the radar for Japanese retail investors due to the real's recovery and their higher interest rates," a Tokyo-based asset management executive was quoted as saying. Even after suffering losses of more than 20% on his investments in Brazilian government securities, Kosaburo Kurimoto, the president of a Japanese beauty-equipment firm, says he is sticking with his decision. "I've decided not to be too emotional on every move up or down," Kurimoto said, adding that "there are no investment products in Japan that offer good yields." According to Japan's Investment Trusts Association, Japanese mutual funds' holdings of Brazilian debt reached 455.6 billion yen in February, up by about 20% from early 2016.
Mexico's central bank chief, Agustin Carstens, has disclosed that two tweets from U.S. President Donald Trump in January prompted the bank to change its strategy for safeguarding the peso, Anthony Esposito and Sharay Angulo report for Reuters. Up until the tweets, the central bank had been resorting to selling dollars in order to prevent the local currency nosediving, but those tweets completely wiped out the impact of a $2 billion currency intervention. "It was precisely then we thought that instead of using hard currency like dollars, it would be better to move to a scheme in which there was the possibility of offering hedges," Carstens said. The central bank is now betting on a $20 billion exchange hedging program to support the peso, and the program has so far seen strong investor appetite as demand far outstripped supply in a recent auction.
Latin America has been the home of some of the most important thinkers of the last century, but the region is currently going through a "dry spell of influential ideas and political appeal," politics professor Dawisson Belem Lopes writes in an editorial for Al Jazeera. Latin America became a hub of original ideas in fields such as politics and economics after experiencing "a unique process of liberation from its colonial masters" in the early 19th century, but nowadays the region seems to be recycling old ideas since the current political landscape is "averse to investments aimed at rescuing the most impoverished and vulnerable ones from marginalization." The professor laments that Latin American countries are in a "race to the bottom on who will be America's new pet" while ignoring the rise of China and India. "In a nutshell, contemporary Latin America is definitely not an artistic, economic and/or political trendsetter."