Excel Funds Management Inc.

Emerging Markets

China and Latin America: Emerging Economic Partnership

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China and Latin America have gradually expanded their trade relations over the past decade but now the pace has increased exponentially. Even though the trade between the two blocks is relatively small in the global trade perspective, it is interesting step for the growth of both the economies.  Resource acquisition remains a cornerstone of Chinese trade and investment in the region. China has emerged as the largest export destination to Brazil, Chile and Peru and the second largest export destination for Argentina, Costa Rica and Cuba. Recent trade and economic tensions between the United States, Canada and Europe on one side and some Latin American countries on the other side has paved the way for Beijing to take control.

Although China’s demand for commodities has fueled economic growth in the region, experts have expressed concern regarding Latin American dependence on natural resource exports to China due to the volatility in commodity prices. However, Chile and other resource rich countries have used profits from Chinese exports to establish education and job training funds. The Chilean Government used funds from the copper exports to China to provide a stimulus package in response to the financial crisis. In recent months China has been negotiating deals to double the development fund in Venezuela to $12 billion, lend Ecuador at least $ 1 billion to build a hydroelectric plant, provide Argentina with access to more than $10 billion and lend $10 billion to the Brazilian national oil company. These deals will make China even politically more involved in Latin America not only economically.

 

Investors around the world stand to benefit from this alliance not only in China but also in Latin America. The mutual trade agreements and the flow of FDI is a sign of increasing growth in the future. Annual investor meetings set by the two regions will result in joint ventures and expansion of local giants into the other region. Chinese infrastructure companies especially are looking at Latin America for expansion given the potential of infrastructure development in the region. Recent months show that China is now a big rival to the United States and EU for seeking trade partners and FDI abroad.

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Author: Excel Funds Management

We Are Leaders. Our Focus is Undivided. Excel Funds is Canada’s specialist in Emerging Market investment opportunities. We pioneered Emerging Market mutual fund design and distribution in Canada. Our focus is undivided – Emerging Markets is all we do. Our Mission Is To Offer Canadians True Global Access By offering Canadians access to rapid growth markets, Excel Funds provides truly global and diverse investment value. Our clients want consistent, responsible and intelligent solutions – we will never stop being challenged and deliver on client expectations. We Listen. We Are Determined To Deliver. Our clients want to understand better. Excel Funds is the only company dedicated to providing investors with actively managed, best-in-class Portfolio Managers based in regional markets. In order to deliver deeper understanding, we are not removed from unique cultural, political and economic experiences. We Initiate. We Create. Investors benefit from strong, sustainable growth. To create wealth for our clients we will: • Offer globally diverse opportunities to capture shifts in world economies • Not resist change and continually lead in Emerging Markets global growth • Engage world class institutional managers for retail investors We Are Passionate. We Will Never Stop Innovating. True leadership is enabling and seeks a positive outcome for all invested. We will not rest on past success, and continue to provide clients with: • Innovative fund structures • Canada’s largest & most comprehensive Emerging Markets products • The best institutional level Portfolio Managers • World class on-the-ground active managers • A singular focus on Emerging Markets, the driver of global growth

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