Tempered Enthusiasm Amid Economic Inconsistency
Opportunities in today’s emerging markets aren’t necessarily discovered in the same places where they have traditionally been found. Countries like Brazil, Russia, India and China have historically been the emerging markets receiving the most attention and foreign investment. It is difficult in 2013, however, to think of very developed economies like those found in Sao Paulo and Bejing as emerging. Quality investments can still be identified and made in these countries, but it’s a path that is now well worn. We continue to believe the best investment opportunities are often found in places where the least amount of people are looking.
We started the journey by flying Copa Airlines, a highly profitable Panamanian carrier principally serving South and Central America, through Panama, and into Lima, which boasts Latin America’s best airport. Lima is the energetic capital of Peru, crammed with one third of the country’s Andean/Spanish population and seemingly filled otherwise with 80’s pop music and vintage Volkswagen Beetles. For many years, Peru was known principally for the wonder of the tourist destination of Machu Picchu and for political and economic dysfunction. What we found was a surprisingly modern country nestled between the Pacific Ocean and the Andes Mountains, rich in natural resources and hard-working yet modest people somewhat wary of their newfound prosperity.
Our enthusiasm and optimism of the investment opportunities in Peru must be somewhat tempered or at least balanced versus the risks that remain. While the trends are certainly encouraging, Peru has never before had or sustained such a prolonged period of political and economic consistency. We will be watching closely to see if the socialist-type missteps often facing governments at this stage of development can be avoided and if the country’s economy can truly emerge as an economic wonder that matches its famed tourist attractions.