For investors, it was the diversity of the Latin American markets—from differing domestic and economic policies to disparate election cycles—that remained a source of strength in the region this year.  

“Latin America continued to be a market where dispersion created opportunities,” according to Carlos Sequeira, head of research at BTG Pactual.

While there are similarities among the countries in the region, the different domestic policies and, notably, electoral cycles created these unique opportunities this year for investors. “In our view, this reinforced the importance of country and stock selection,” he added. “Positive outcomes in presidential elections in Chile, Peru and Colombia boosted the performance of these equity markets in the past year. This year, Brazil’s presidential elections are the main highlight, while in 2027 we have presidential elections in Argentina.”

Latin America remained a stock picker's market, confirmed Thiago Macruz, head of research at Itaú BBA. “While the region underperformed broader emerging markets due to its limited exposure to the AI and semiconductor value chain, returns within Latin America were highly differentiated, driven by distinct country and sector stories.”

The North Andean markets of Colombia and Peru were among the region's bright spots, supported by improving macro conditions and renewed investor interest in commodities. Argentina continued to perform as the reform agenda gained credibility, with the energy sector emerging as a compelling investment theme.

Brazil combined resilient corporate fundamentals with persistent fiscal uncertainty, reinforcing the importance of bottom-up stock selection over macro calls—with energy, financials, and utilities/infrastructure explaining the key part of year-to-date performance, Macruz reported.

Mexico underperformed as weaker consumer demand and a softer domestic economy weighed on earnings expectations, while Chile lagged amid downward GDP revisions and weaker domestic activity, despite remaining a compelling long-term structural story given its leadership in copper and the energy transition.

“Across the region, investors consistently rewarded companies that delivered resilient cash flow, earnings upside, and strong execution, particularly those exposed to structural themes such as commodities, infrastructure, and energy,” he said. “The main headwinds remained fiscal developments. Latin America remains an important diversifier to EM's concentrated AI exposure—and can benefit indirectly from secular productivity trends.”

The mood in the region changed sharply with the start of the Iran conflict earlier this year, according to Rodolfo Angele, head of LatAm Equity Research at J.P. Morgan. “Oil spiked toward triple digits, and the knock-on jump in global (and local) rates pressured equities even as elections in places like Chile, Peru, and Colombia read as broadly constructive,” he said “Tariffs were the other speed bump and were uneven in impact. Mexico felt it most—capex slowed amid uncertainty and USMCA questions—while Brazil’s hit was more sentiment/politics than direct economics.”