June 8, 2018 |
If presidential elections have an effect on appetite for bonds, then 2018 is proving to be an uncomfortable year for investors in Latin America. Elections loom in Brazil and Mexico, the region’s two largest economies, following votes in Colombia and Venezuela.
Mexico is the big worry. Andrés Manuel López Obrador, the left-wing former mayor of Mexico City, looks to be a shoe-in ahead of the election on July 1, raising concerns that a return of populism could bring on waning investment and excessive public spending. López Obrador had opened a 15-point lead on his nearest rival, Ricardo Anaya, the conservative head of a left-right coalition, by mid-May, according to the Oraculus poll of polls.
After a year of good returns, bond investors in Latin America face increasing volatility — again. Elections and higher interest rates loom, keeping debt fund managers on their toes.