Money managers in emerging markets are turning their attention to Latin America in search of their next big bet, as the upcoming wave of elections is likely to redraw the political map in the region, pushing a number of its countries closer to Donald Trump. This renewed interest comes after Argentina saw a surge following the victory of President Javier Milli in the mid-term elections, with unprecedented US support. For many, the country has become a case study in how right-wing political shifts, particularly those seen as more aligned with Trump, can spark broad gains in emerging market assets. Also read: Trump threatens to withdraw support from Argentina if Milley’s coalition does not win the midterm elections. “You are facing a potential shift in trends to the right in Latin America,” said Pramol Dhawan, head of emerging markets portfolio management at Pacific Investment Management Co. “If this shift occurs, these assets will rise strongly. There will be nothing even close to the returns you will see in the local Brazilian or Colombian markets.” Chile, Colombia and Brazil, among the region’s largest economies, hold presidential elections in the next 12 months, with investors hoping for a shift to a more market-friendly approach in the three countries. In addition to Argentina, countries such as El Salvador and Ecuador are at the heart of this bet; Investors see it as more compatible with US interests. The three countries’ dollar bonds have posted gains of no less than 24% since Trump’s election last year, according to data compiled by Bloomberg. This compares with a return of 13% for a benchmark index of sovereign debt in developing countries. This jump highlights how some funds are looking to specific election results as a driver of market movements. Zaftra, a Brazilian hedge fund that specializes in election-related bets, had its best month ever in October, up 9.2% after fees, benefiting from Milley’s victory in the midterm elections. Launched in 2023, the fund also established a position betting on the rise of the Chilean peso ahead of the first round of elections that saw the rise of another right-wing candidate, according to Felipe S\u00e9, portfolio manager at ASA, a company linked to billionaire Alberto Safra, which manages the fund. Read more: Despite a drop in popularity, Milley’s party wins mid-term elections in Argentina. Changing dynamics. “The Trump administration views the Western Hemisphere as its backyard, and believes that the United States has not only a right but an obligation to intervene, especially when it comes to countering Chinese influence in mineral heavyweights like Chile,” said Petar Atanasov, co-head of sovereign debt research at Gramercy Funds Management. The company is taking a constructive stance on Chile heading into the 2026 cycle, looking at sovereign bonds and the peso. “We think Chile has room to make up for lost ground in the foreign exchange market,” Atanasov said, adding that any improvement in relations with Trump would be a big positive boost. The first round of elections in Chile last weekend saw hardline conservative Jose Antonio Caste emerge as the preferred candidate for the Dec. 14 runoff, sparking a surge in the peso before global risk appetite weakened. Polls in Colombia and Brazil point to growing frustration with leftist presidents Gustavo Petro and Luiz Inacio Lula da Silva, raising the possibility of more market-friendly results next year, scenarios traders see as supportive of the region’s assets. “When we expect change, it’s because voters are frustrated with the incumbents,” said Graham Stock, senior emerging markets sovereign debt strategist at RBC Bluebay. “This is true in Chile, and maybe in Colombia, where Petro has disappointed.” You may be interested in: “Donroe Doctrine”… How did Trump restore Washington’s hegemony over Latin America? Limited impact Emerging market assets posted broad gains in 2025 as investors moved away from US markets amid policy volatility. Debt restructurings, progress on IMF agreements and rising commodities also helped support assets. Also, proximity to the President of the United States has not always been a reason for making gains, as the Indian Prime Minister, Narendra Modi, for example, has not yet concluded any trade agreement with the largest economy in the world. However, Trump’s name remained strongly present in developing markets. Hungarian Prime Minister Viktor Orban has talked about the possibility of a bailout similar to what happened in Argentina, something that has confused investors who are taking advantage of one of the best waves of gains in emerging market assets. In Latin America, the political re-centering around US policy shifts has even reached one of the most strained ties in the world. Trump’s tougher stance on Venezuela is supporting the country’s distressed bonds, as the price of some doubled as traders braced for the possibility of the ouster of socialist leader Nicolas Maduro. “The odds of regime change have become much higher,” Gramercy’s Atanasoff said. “We went from no hope of any change to closer to 50\/50.”<\/p>\n","protected":false},"excerpt":{"rendered":"
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