U.S. stocks underperformed global stocks last year, as President Donald Trump’s trade policies and apparent threats to the Federal Reserve’s independence regularly led investors to choose to “sell America.” The Latin American market benefited greatly. President Trump’s approach to the region through 2026 includes operations to capture and retake Venezuela’s president, impose an oil blockade on Cuba, and threaten military action in Colombia and Mexico. But investors in the region appear unfazed, with the region’s stock indexes continuing to outperform as the war between the US and Iran brings a new wave of volatility to international markets. Brazil’s benchmark BVSP index has risen 21.7% since the beginning of the year. Chile’s S&P IPSA rose 8.2%, while benchmark indexes in Colombia, Peru and Mexico posted year-to-date gains of 10.6%, 18.8% and 9%, respectively. The S&P 500 is up 3.9% since the beginning of the year. This follows a remarkable event in 2025, when Chile’s benchmark S&P IPSA index rose 56.2%, far outpacing the S&P 500’s annual gain of 16.4%. Stocks listed in Brazil, Mexico and Colombia were also among the best performers in the emerging markets portfolio. A Bank of America survey of Latin American fund managers released last month showed that its positioning in the region continues to build. A separate BofA note in January said local markets in Latin America hit record highs in the weeks following the U.S. military operation in Venezuela. The bank said this was “underpinned by strong foreign capital inflows” into emerging markets. The MSCI Emerging Markets Index, which rose 33.6% in 2025, is up 14% since the beginning of this year. Meanwhile, the MSCI Emerging Markets Latin America Index, which soared 54.8% last year, is already up 23% since the start of 2026. The dramatic operation to capture Venezuelan President Nicolás Maduro on January 3 boosted investment rather than dampened it. The country’s listed stocks have soared to record highs on hopes that the new government and U.S. involvement could improve the economy. The company’s benchmark index Bursatil de Capitalización (IBC) is up about 216% since the beginning of the year. After President Maduro was captured, President Trump continued to impose a de facto fuel blockade on Cuba, suggesting that Colombia and Mexico could also be at risk of U.S. intervention if drug trafficking allegations were not cracked down. Roman Bordenabe, emerging market fixed income and foreign exchange portfolio manager at Edmond de Rothschild Asset Management, told CNBC that Venezuela is “the story of a very isolated emerging market” after “years of sanctions, debt defaults and economic collapse.” “As a result, even significant political developments tend to have limited spillovers. For emerging market investors, Venezuela is more of a niche, options-driven case than a systemic risk that could destabilize regional assets.” Nicolas Jaquier, emerging market fixed income portfolio manager at Ninety One, said Latin America’s resilience to ongoing global geopolitical risks is limited by its direct trade links with the Middle East and its distance from the region’s commodity assets. “The risk of an extended closure of the Strait of Hormuz also serves to re-emphasize the importance of Latin American oil markets for the United States. From that perspective, existing oil producers such as Brazil, Colombia, Mexico and Ecuador should benefit,” he told CNBC in an email. He added that Argentina’s oil and gas trade balance has turned positive and there are strong prospects for continued production growth, meaning the country will benefit as a relative newcomer to the energy export market. “Oil prices have risen in recent days in Iran, in part due to looming peace talks, but perhaps also due to the increased importance of stability to the United States, and President Delcy Rodriguez’s inauguration is on track to realize key American demands,” Jaquier said, adding, “So far, the currency has moved faster than expected.” “Markets that were pricing in rate cuts (Brazil, Mexico, Chile) have repriced significantly, with only Brazil still pricing in some rate cuts, which has come down significantly,” he said, adding that his team believes markets are pricing in 1. 00 basis points is “overdone”, he said, although some of the consensus positions in Brazil and Mexico have narrowed significantly, “foreign exchange should be relatively supported by external accounts and high real interest rates.” Chris Metcalfe, chief investment officer at IBOSS, told CNBC that the Brazilian real appreciated more than 7% against the dollar, even as the dollar rose 4% as investors sought safe haven assets amid the Iran war. “Rarely have we seen greater diversification across both asset classes and currencies,” he said. “Given the seriousness of the situation in the Middle East, currency markets would have expected a much stronger performance for the US dollar than reality. This suggests that once hostilities subside, the dollar is likely to return to a downward trend, unless it persists for several years,” he said. “More broadly, we do not believe the current U.S. administration’s approach will support U.S. assets beyond very short-term safe trade.”Latin American markets have been particularly hard hit by President Trump’s country-specific tariffs. Brazil faces 50% tariffs, which President Trump blames in part on the prosecution of his ally, former President Jair Bolsonaro, but after the Supreme Court struck down those tariffs in February, Trump imposed a 10% blanket tariff that could soon be raised. Thomas Mucha, geopolitical strategist at Wellington Management, said the asset manager is seeing increased interest among clients across emerging markets. “Investors are generally moving away from the idea of emerging markets as an asset class and are increasingly focused on the performance of individual countries,” he told reporters in London in March. It’s about diversification,” he said.
