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Main European ETF tracking LATAM approaches key Resistance Levels

Ignacio Teson•Wednesday, February 7, 2024•2 min read

Main iShares ETF tracking LATAM approaches key Resistance Levels

The iShares MSCI Latin America UCITS ETF, which has more than 350 million dollars in assets under management is approaching a key resistance level.

Since 2015, Latin American companies, much like most countries in the region, have struggled to break free from economic stagnation. Presently, Mexico’s robust economic performance is driving the index collectively.

Colombia and Mexico stand out as the best performers in a region mired in stagnation for many years. Brazil and Argentina notably exhibit low or no growth. Most per capita GDPs in the region were higher 15 years ago.

The iShares MSCI Latin America UCITS ETF reflects this reality, but Latin America may be facing a new opportunity for asset price recovery. This ETF, primarily comprising Brazilian and Mexican companies, is at a critical juncture.

If it manages to break resistance, we could be facing a historic opportunity to execute a classic “breakout” trading strategy that could drive the asset price to levels seen in the early 2010s.

The primary target, in such a scenario, would be $20 per share for LTAM.

LTAM tracks the MSCI Latin America Index, which includes companies from Brazil, Mexico, Chile, Peru, and Colombia, among others. This ETF is only available in Europe and has tax advantages.

However, another way to trade LATAM as a whole is with the more liquid ETF iShares Latin America 40 (ILF), which consists of the 40 largest and most liquid stocks in Latin America. This ETF is indeed available in US brokerage firms.

ILF is also at a crucial juncture. Latin America faces a pivotal moment regarding its economic future. Mexico benefits from nearshoring and US investment.

However, countries like Argentina and Brazil struggle to stabilize their economies and achieve sustainable growth due to China’s recent slowdown.

China is the primary destination for exports from countries like Argentina, Brazil, Paraguay, and Uruguay in Latin America.

Indeed, within merely three years, Chinese stocks have plummeted by around $6 trillion, roughly double the annual economic output of Britain.

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ABOUT THE AUTHOR See More
Ignacio Teson
Ignacio Teson
Economist and Financial Analyst
Ignacio Teson is an Economist and Financial Analyst. He has more than 7 years of experience in emerging markets. He worked as an analyst and market operator at brokerage firms in Argentina and Spain.
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