Stock exchanges in Brazil, Colombia and Mexico have experienced a sharp rise in foreign inflows, helping propel the MSCI EM Latin America Index to its highest level in eleven years, News.Az reports, citing Bloomberg.
The index has surged more than 20% in 2026, marking its strongest start to a year since 1991. On Friday, the gauge notched its ninth consecutive week of gains — the longest winning streak since 2017.
The renewed interest highlights a shift in investor positioning toward a region that had long been overlooked. With presidential elections approaching in Brazil and Colombia, traders are reassessing the potential for policy changes and lower interest rates. The rally gathered additional momentum after the US Supreme Court struck down President Donald Trump’s broad global tariffs, a move investors see as another supportive factor for Latin American equities.
“Latin America is back on the map, and people are paying attention to the region at a rate not seen in 10–15 years,” said Alejo Czerwonko, chief investment officer for EM Americas at UBS Global Wealth Management. He noted that emerging markets have been under-allocated for an extended period, with Latin America particularly neglected.
Although broader diversification away from US assets is benefiting emerging markets overall, capital flows into Latin America have stood out. Malcolm Dorson, senior portfolio manager at Global X Management Co., said the Supreme Court’s decision increases concerns about US deficits and political uncertainty, putting pressure on the dollar and potentially strengthening Latin American assets further.
The surge in demand is clearly visible in US-listed exchange-traded funds. BlackRock’s iShares Latin America 40 ETF (ILF) attracted a record inflow of more than $1 billion in January alone, bringing total assets to approximately $4.3 billion.
Similarly, the iShares MSCI Brazil ETF (EWZ), the largest US-listed fund tracking Brazilian equities, recorded its strongest monthly inflows in over a decade in January. The ETF has become a preferred vehicle for investors seeking exposure to the region’s largest economy. Among those increasing positions was billionaire Stanley Druckenmiller’s Duquesne Family Office, which added EWZ shares shortly before the fund posted a 17% gain in January.
In Brazil, part of the bullish outlook is tied to October’s presidential election. Some investors are speculating that a political shift could result in the defeat of Luiz Inacio Lula da Silva. Portfolio manager Thierry Larose of Vontobel said markets may see more upside if the opposition prevails, though uncertainty remains over the outcome.
The emergence of Flavio Bolsonaro, son of former president Jair Bolsonaro, as a candidate late last year triggered a temporary selloff, as his candidacy diminished expectations that São Paulo Governor Tarcísio de Freitas — viewed as more market-friendly — would enter the race.
Some investors are waiting until April, when officeholders must step down to formally run for president, before committing to larger positions.
In Colombia, political divisions among center- and right-wing candidates ahead of May’s presidential election are adding to uncertainty, while the leading leftist candidate is currently ahead in polls. Larose cautioned that markets could react sharply depending on the outcome.
Meanwhile, Mexico faces its own challenges despite not holding a presidential election this year. The country must navigate uncertainty linked to a review of its trade agreement with the United States and Canada, a process that could influence investor sentiment in the months ahead.
