Morgan Stanley Expands Latin American Investments

Morgan Stanley is ramping up its investments in Latin America amid rising geopolitical conflicts, recognizing the region’s growing economic importance. With wars in Europe and the Middle East and increasing tensions in Asia, Latin America is becoming crucial for reorganizing supply chains and accessing vital resources like food, industrial metals, transition fuels, and pharmaceutical ingredients.

To capitalize on these opportunities, Morgan Stanley has been steadily increasing its investments in Brazil, Mexico, and other Latin American countries. This expansion includes adding personnel and capital, with significant opportunities seen in merger-and-acquisition advice, capital-markets underwriting, sales and trading, and private credit. The firm currently has around 400 employees dedicated to serving its Latin American clients.

The wealth management division, one of the top five managers for affluent individuals in Latin America, grew its assets by approximately 6% last year, reaching around $120 billion. Despite the region’s economic potential, it faces volatility, including macroeconomic challenges and political transitions. For example, Mexico’s new president, Claudia Sheinbaum, has introduced uncertainty for investors due to potential constitutional reforms, which has impacted the peso, now down nearly 8% against the dollar this year.

Morgan Stanley sees significant investment opportunities in Mexico, supported by foreign direct investment and remittances. The bank recently underwrote the $677.4 million IPO of BBB Foods Inc., a discount retailer in Mexico, and participated in transactions involving Peruvian healthcare company Auna SA. It is also one of the announced underwriters for the anticipated IPO of Grupo Aeromexico SAB.

In Brazil, despite fiscal concerns and a 10% decline in the real’s value this year, foreign interest remains strong. The country presents substantial opportunities in technology-enabled fintech, e-commerce, and renewable energy, including second-generation ethanol for aviation. The war in Ukraine has further highlighted Brazil’s potential as a key supplier of energy and food exports to Europe.

In Argentina, Morgan Stanley’s investment activity is contingent on the government’s implementation of fiscal and tax reforms. Positive steps like reducing inflation, tax cuts, and privatization plans could spur more investment. The firm also aims to continue serving clients across its institutional and wealth businesses in Peru, Colombia, and Chile.