Latin American equities, good start to 2025
Let us use intermarket tools to assess the performance of Latin American equities and its two largest countries, Brazil and Argentina.
Latin American equities have had a positive start to 2025. The search for diversification and the move away from US equities have undoubtedly also benefited the region’s equity markets. Since the beginning of 2025, we have seen the ratio of AML stocks to world stocks change trend and reach the 200-day moving average. A breach of this threshold would represent a further strengthening of the region’s relative strength compared to the global market.
One of the most important economies in the region is undoubtedly Brazil. If we look at the evolution of the strength ratio between the MSCI Latin America index and the MSCI Brazil index, we see a rather nervous trend. Since the late summer of 2024, the indicator has tended to be weak and remains below its long-term average.
For Argentina too, the momentum seems to be one of weakness relative to the region’s stock index. The strength ratio above shows a sharp reversal since early 2025, with the indicator falling below its 50-day average.
The intermarket analysis seems to suggest that South American equities are strong relative to global equities. A differentiated approach to the region seems more appropriate than focusing on individual large economies in the region.
