Latin America Can Make It Without China's Help - TheStreet

NEW YORK (TheStreet) -- Latin American stocks can withstand a slowing Chinese economy as consumers pick up the slack for exporters, according to Nick Robinson, who helps manage the Aberdeen Latin America Equity Fund (LAQ) . Latin America is powered by sales of commodities including copper and oil.

The Aberdeen Latin America Equity Fund, a closed-end fund, has fallen 2.2% this year, slightly less than the benchmark MSCI EM Latin America Index's 2.4% decline. The Aberdeen fund soared 121% last year, more than the index's 104% gain.

China, the world's third-largest economy, is set to slow in the months ahead, according to a World Bank report released last week. The country, one of the four so-called BRIC nations that include Brazil, Russia, India and China, is helping global economies expand as the U.S. and Europe fight high debts and unemployment.

Welcome to TheStreet.com's Fund Manager Five Spot, where America's top mutual fund managers give their best stock picks and views on the market in a five-question format.

Is Brazil the best of the BRIC countries?

Robinson:

There's a very strong case for Brazil being the best BRIC. Over the past 10 years or so, the government's paid down a lot of its foreign-currency debt, inflation is now under control, and interest rates are likely to be low through the cycle, which means the risk profile of the country has been meaningfully changed. And having lower interest rates through the cycle means the consumer is likely to be a very powerful driving force in the future. So I think that's why there's a good case for Brazil being at least one of the best BRICs.

Latin America's economy is commodities-driven. What happens if China's economy slows, leading to weaker demand?

Robinson:

The potential impact if China slows is that commodity prices are going to decline. That's negative in Latin America. But on the other hand, you've got to understand, these days in Latin America the internal domestic demand story is a very powerful one. So even if commodity prices weaken and that influences GDP, domestic demand is likely to remain strong and that should keep the economy going pretty well through the crisis.

One of your favorite companies is Petrobras (PBR) - Get Report.

Robinson:

We like Petrobras at the moment. It's been one of the worst-performing stocks within Latin America in the first quarter, but that's on the back of concerns for a big capital issuance about to come to market, and that's really been a huge overhang for the stock -- investors are concerned about what form that's likely to take. Once this capital issuance is done and the overhang is gone, we think the stock will perform quite well.

You're a big fan of Chilean stocks. One of your favorites is Banco Santander-Chile (SAN) - Get Report.

Robinson:

Santander Chile is a very well-run bank. It's a very simple bank that just takes deposits and lends those deposits out. As such, it didn't really get involved in any of the problems that affected more developed world banks. And we like the banking sector in general in Latin America; it's a good play on that consumer theme. As more consumers in the middle class become financially active, these banks should benefit from that as deposits and loans and, therefore, net income grows.

How dependent is Chile on copper?

Robinson:

Because Chile has been saving revenue generated from the strength in the copper price recently, it won't be a huge problem if prices come off significantly because it will just mean the country is saving less revenue. Chile has been saving those revenues in a stabilization fund that's very well capitalized at the moment, and it's using that fund to repair the country from the earthquake damage. So I don't think it will be a huge influence in the short to midterm if copper prices come off in Chile.

-- Reported by Gregg Greenberg in New York.

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Before joining TheStreet.com, Gregg Greenberg was a writer and segment producer for CNBC's Closing Bell. He previously worked at FleetBoston and Lehman Brothers in their Private Client Services divisions, covering high net-worth individuals and midsize hedge funds. Greenberg attended New York University's School of Business and Economic Reporting. He also has an M.B.A. from Cornell University's Johnson School of Business, and a B.A. in history from Amherst College.