Resurgent Brazilian markets and the 'bubble' threat

Brazil’s president Dilma Rousseff has complained that a ‘tsunami’ of liquidity has been flooding emerging markets, cheap cash from the US and Europe that threatens to create ‘bubbles’.

But Will Landers, one of the biggest investors in Latin America, is more sanguine about the bubble threat. ‘When you look at the equity market, when you look at valuations, we don’t see bubbles. We don’t see bubbles in the credit market in Brazil like a lot of people have been worrying about.’

In line with other emerging markets, Brazil's Bovespa stock index is up 12.8% so far this year after shedding 18% last year as investors sought what they perceived as safer places for their money amid the eurozone crisis.

Brazil’s economic progress made news headlines last week after data for 2011 showed it had leapfrogged the UK in the world’s ranking of largest economies. But the Bric country is not without its problems: its economy grew by just 2.7% last year, compared to 2010’s GDP leap of 7.5%.

Brazilian-born Landers, who runs the BlackRock Latin America Investment Trust , a Citywire Selection Star Pick, tells us about the prospects for Brazil – which dominates the fund – and the rest of Latin America amid a rising oil price and continued threat from the euro crisis that deterred investors from the region in 2011. In particular he is watchful about the second biggest country the trust is exposed to, Mexico, ahead of presidential elections in July.

Despite a particularly difficult 2011, the trust’s share price has gained by 75% over five years, while it was trading at a discount of 6.9% on 5 March.