Latin American capital
markets exploded in recent
years. Now only a few are
well positioned to recover.
by Benjamin D. Wolf
From
Decoupling
to
Deleveraging
and
Divergence
The global financial crisis has caused a
dramatic disruption in Latin American capital markets. While asset values in mature markets had been
diminishing for well over a year prior to the fall
2008 meltdown, the crisis hit Latin American markets abruptly. In a matter of months, major regional
stock indices lost nearly half their value, the issuance
of corporate securities came to an abrupt and seem-
ingly definitive end, and foreign investors fled the
region en masse.
Capital markets in Latin America had been in
a period of rejuvenation during the preceding five
years. Capital, lured by increased political stability and growth prospects better than those of any
advanced economy, flowed to the region’s financial
markets in unprecedented volume. This period of
