Comparative Swot Analysis of Southeast Asia with South America

John Fairty

Bus 457

April 10, 2013

Comparative SWOT Analysis of Southeast Asia with South America

South America: A Comparative Region and a Starting Reference Point

In recent times, the region of the world which has been attracting the most attention from foreign investors is South America. Particularly it is the southern most countries of Argentina, Brazil, and Chile that have been publicized as investment hotspots. For example, in contrast to the IShares Barclays TIPS fund which is comprised of government and corporate debt from the United States and has a 30 day yield rate of -4.43%, the Market Vectors LatAm Aggregate Bond has a monthly yield of 4.13%. It should also be noted that according to Bill Gross the president of PIMCO, the world's largest bond investment firm, Brazil has some of the "cleanest" public debt in the world despite a credit rating of BBB by Standards and Poor and Baa2 by Moody's and Fitch. However, even with that being said, both Argentina and Brazil have fallen in recent times and this trend is expected to persist into the future. Chile on the other hand has historically remained dormant from foreign investment, however with the slump of both Brazil and Argentina over the last two years it has become an increasingly attractive target. Being led by its banking sector, stocks in the country have been picking up by about 22% annually for the last five years. Banco de Chile is an example of just such a performance. In the last decade alone earnings growth has averaged 18% between years while its stock price has doubled in just half that time. Chilean banks and financial service firms are also eye-catching because public sector pensions are nonexistent within the country. Instead, the country has a mandatory savings rate for state workers of 22% which has given the country's banks a great deal of deposits and capital to work with. Furthermore, the INTCL, Chile's primary stock index, has beaten the S&P 500 by 73% over the last five...