Seventy percent of institutional investors in North America and Europe believe that companies in Latin America should pursue initial public offerings, according to a survey conducted in September by J.P. Morgans Depositary Receipts (DR) business and released yesterday.
Despite macroeconomic headwinds in Europe and China, investors believe Latin America has steadfast domestic markets and attractively valued companies that demonstrate significant growth potential, according to J.P. Morgan.
The survey polled 40 institutional investors based in North America and Europe with a combined $43 billion, or 16%, of actively managed equity in Latin American companies.
Each year we survey North American and European institutional investors with the aim of helping our Latin American clients better understand investor sentiment toward companies in the region, says Candice Teruszkin, Latin America Regional DR head at J.P. Morgan. The findings from this years survey may help Latin American issuers identify ways to improve their market valuations over time and to better compete for and attract capital needed to fund their growth.
The survey also found that the consumer goods (65%) and consumer services (60%) sectors offer the most attractive investment opportunities due to Latin Americas growing middle class, rising income levels and low domestic unemployment. Respondents also said government intervention and trading liquidity are the regions two greatest challenges, according to 38% and 28% of survey participants, respectively.
A majority of respondents (55%) believe that an ADR program can help a Latin American issuer maintain a fair market valuation. More than a third (35%) recommend that Latin American companies should adopt international reporting standards in order to maintain fair market valuation.
(CG)