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Like other members of the emerging world, Latin American nations have run into headwinds in recent weeks. As rising commodity prices and inflation fears weigh heavily on volatile regions of the globe, many investors have redirected their attention toward more stable, developed nations, such as the U.S. and Canada.
Although its popularity has waned, the region south of the United States remains attractive for a number of reasons. Aside from its close proximity to the healing U.S. economy, Central American and South American countries continue to offer a welcomed source of relative political and economic stability.
In 2010, I turned to nations, such as Mexico, as a way to avoid both the looming debt crisis facing Europe and doubts regarding China's long-term growth picture. Today, the international picture has witnessed little change; the E.U. remains embattled with its debt problem, while political unrest across the Middle East and Northern Africa is making daily headlines and raising concerns about the future stability there and the price of oil.In the event that the developing world returns to prominence, however, Latin America could once again come out as a leader. In particular, Chile, Peru and Colombia could reign as emerging market favorites. Investors can tap each of these countries through the iShares MSCI Chile Investable Market Index Fund (ECH), the iShares MSCI All Peru Capped Index Fund (EPU) and the Global X FTSE/InterBolsa Colombia 20 Index ETF (GXG), respectively. Although all three appear promising in the event of an emerging market resurgence, each has performed noticeably differently during the opening months of 2011. Government intervention in the currency markets has pressured ECH throughout the new year. As a leading global supplier of copper, Chile witnessed a staggering run-up in 2010, as nations around the globe continued on the road to recovery. In an attempt to quell the strength of the peso, the Chilean Central Bank announced a plan in January to increase currency reserves by $12 billion in 2011. This action has caused ECH to tumble below its 50- and 200-day moving averages. It was not until ECH had retreated back to levels last seen during the summer that this fund managed a slight bounce, which is similar to the 2010 correction spurred by similar intervention.
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