LatAm SMIDs Preferencias

研报英文原文证据摘录

LatAm SMIDs Preferencias

lcabras Mexico: Gentera, Regional; Pan-

LatAm: Auna, Arcos Dorados, Bladex, Laureate, PriceSmart. Source: Jefferies, FactSet

Latam Small caps prolonged underperformance. Latam Small Caps, particularly Brazil, have seen

a prolonged and extreme period of underperformance over the past 15 years, driven primarily

by macro and market structure headwinds. Structurally high real interest rates have been the

key factor, compressing valuations and disproportionately hurting “long-duration” Small Caps,

while repeated macro volatility, and weak domestic growth undermined earnings quality. Liquidity

has deteriorated materially as retail and institutional flows shifted away from equities (especially

since 2021), foreign investors have concentrated on large, liquid names, and passive flows have

reinforced index concentration in commodities and banks, with the liquidity premium further

exacerbated by disappointing post-IPO performance from the 2020–21 cohort and lingering

governance discounts.

Real rates and domestic equity flows are key drivers. Lower interest rates would ease discount

rate pressures and typically drive strong relative performance in SMIDs, while renewed participation

from retail and local institutions would help normalize liquidity and valuation gaps. In parallel, better

capital allocation, margin recovery, and balance sheet repair at the company level are critical to

rebuild investor confidence. With valuations and positioning already at extreme lows, the segment

offers significant upside leverage to any improvement in macro conditions or flows, but absent

these catalysts, the discount could persist for longer.

Near-term backdrop remains volatile and macro-driven, with politics, oil prices, flows and