Latin America's New Investment Window

Key Takeaways

• Peru offers a rare combination of political stability, a $64 billion mining investment pipeline, and a banking system with years of credit expansion ahead.
• Mexico's nearshoring story is evolving with non-auto exports to USA growing more than 38% year-to-date as tech and data center supply chains replace automotive as the primary driver.
• Chile's 2026 slowdown appears temporary, and we are constructive on the country’s growth trajectory on government’s pro investment agenda.
• Argentina's export boom is reform-driven — and hinges on policy continuity to last.

Why the Andes, Why Now

In June 2026, we spent a week on the ground across Chile, Argentina, Peru, and Mexico meeting with management teams, central banks, economists, and companies across banking, mining, energy, retail, and real estate. The conclusion is clear: The region hasn't looked this attractive to investors in years.

For most of the past two decades, investment opportunities in the region were episodic, tied to individual commodity cycles or isolated reform programs, with major economies seldom moving in the same direction. What is different today is the convergence: market-friendly governments, improving fiscal positions, and a structural commodity demand cycle, aligning simultaneously across the region for the first time in over a decade.

Fixed capital investment as a share of GDP is rising across Argentina, Chile, Peru, and Mexico together, a synchronization that has historically preceded periods of sustained economic outperformance. Electrification, data center build-out, and AI investments are creating a structural demand cycle in copper, lithium, natural gas, and energy infrastructure.

The region is uniquely positioned to supply this demand: Latin America accounts for approximately 35% of global copper production and holds approximately 46% of global lithium reserves ¹, resources that are structurally difficult to bring online quickly, with mine-to-production timelines of a decade or more, making supply constraints as important a driver of long-term prices as demand growth.

Copper and Lithium Resources Across the Region

Source: USGS Mineral Commodity Summaries. Data as of January 2025.

Peru — Strongest Conviction

Keiko Fujimori's election win in June 2026 marks a genuine inflection point. After five presidents in five years, Peru now has a stable, market-friendly government with the political mandate to advance long-stalled investment in natural resources projects. Peru's documented mining investment pipeline stands at $64 billion ², or 16% of GDP, with an additional $40 billion committed under ProInversión, the government's private investment promotion agency, across 86 infrastructure projects spanning transport, energy, health, and logistics through 2028. ³ GDP growth is running at 3.8% in 2026 and could reach 5% or above in 2027 as that investment flows through. ²

The investment case for Peru extends beyond mining and infrastructure. We particularly like the banking sector, as we believe it presents one of the most compelling structural growth opportunities in the region. At just 33% of GDP, Peru's private sector credit penetration is less than half of Chile's 88%, pointing to years of expansion ahead across consumer, corporate, and mortgage lending in a system already growing at double digits. ⁴ Digital payment platforms are beginning to use transactional data to extend formal credit to borrowers who have historically been outside the banking system. Credicorp (0.85% of Fund Net Assets) is our highest-conviction position in the region and the clearest expression of Peru's credit expansion thesis. The holding company behind BCP, Peru's leading bank, and Yape, the country's dominant digital payments platform, Credicorp sits at the intersection of credit expansion and the digitization of financial services.

Mexico — Nearshoring Evolves

Mexico's export sector is undergoing a structural shift. Automotive supply chains, the historical engine of Mexican manufacturing, are flat, while non-automotive manufacturing exports surged nearly 38% year over year in the first half of 2026 ⁵, driven in significant part by technology and data center supply chains tied to AI infrastructure investment in the United States. Mexico remains the United States' largest trading partner, and those supply chains are too integrated to unwind. The trade framework underpinning this relationship remains fully in force and bilateral negotiations between the U.S. and Mexico are ongoing. The overhang that had been weighing on investment decisions has not fully lifted, but the structure of North American trade integration makes a disorderly outcome unlikely.

Vesta (0.74% of Fund Net Assets) is Mexico's leading industrial REIT and our direct expression of the nearshoring evolution we observed on the ground. Leases are denominated in U.S. dollars in a peso-cost environment, a structural advantage in a region prone to currency volatility. The company recently closed a 570,000 square feet ⁶ industrial leasing transaction in Monterrey driven by data center demand, one of the largest in Mexican history. As tech-driven nearshoring accelerates, Vesta’s development pipeline has a long runway ahead.

Beyond trade and manufacturing, Mexico's domestic credit cycle is accelerating across consumer, payroll, and corporate lending. Banorte (0.71% of Fund Net Assets) captures that opportunity, with a well-capitalized balance sheet and a management team with a consistent track record of execution.

We have also observed a structural shift in Mexican consumer behavior, with value grocery formats gaining ground at the expense of traditional supermarkets and hypermarkets. BBB Foods (1.17% of Fund Net Assets) is taking share from traditional supermarkets as its low-cost model resonates with an increasingly value-conscious consumer base. We observed the same consumer trend on the ground across Peru and Chile, suggesting a structural rather than cyclical change in retail behavior across the region.

Argentina — Structural Export Re-Rating

Milei's reform agenda is the most ambitious structural overhaul Argentina has ever attempted, encompassing labor reform, deregulation, privatizations, and a fiscal surplus achieved for the first time in over a decade. The adjustment has been uneven with export sectors booming while domestic manufacturing and construction lagging, but the export transformation is real.

Argentina's natural resource base is the foundation of the re-rating thesis. The Large Investment Incentive Regime, a government program offering 30-year tax, customs, and foreign exchange stability to attract large-scale foreign investment, has attracted nearly $95 billion in registered projects with $30 billion already approved. Energy and mining together account for more than 98% of committed capital, spanning copper, gold, lithium, and Argentina’s shale oil and gas reserves. The first LNG export facility begins operations in 2028 with offtake contracts already in place. Total exports could plausibly double by end of decade. ⁷

The banking sector represents an equally compelling, if less discussed, dimension of the Argentina opportunity. After years of stress, loan quality is improving, showing early signs of a credit cycle turning. At just 12% of GDP, Argentina's private sector credit penetration compares to 33% in Peru and 88% in Chile, a compelling structural setup. We view this as a sector to watch as lending conditions continue to normalize.

Chile — Cyclical Trough, Structural Opportunity

Chile's 2026 GDP slowdown to approximately 1% to 1.75% ⁸ reflects three concurrent supply shocks: El Niño disruption to fishing and agriculture, oil price pass-through from the Middle East conflict, and construction activity stalling ahead of pending tax reform. In our opinion, all three are transitory, with the central bank projecting a recovery to 2% to 3% in 2027 ⁹ driven by stronger investment momentum in mining, energy, and infrastructure.

We believe Chile’s National Reconstruction and Economic Development Bill, a sweeping pro-investment legislative package submitted to Congress in April 2026, is the primary catalyst to unlock a significant structural opportunity. The bill reduces corporate tax rates from 27% to 23% by 2029, introduces a 25-year tax stability regime for major projects, and cuts permitting timelines that currently exceed 1,000 days ¹⁰. The government has secured opposition support on key provisions, a degree of bipartisan alignment that is rare in Chilean politics and signals genuine policy continuity.

We currently hold no direct Argentina or Chile positions. In Argentina, the export re-rating is compelling but the 2027 election cycle warrants discipline on timing and sizing. In Chile, we are constructive on the recovery setup but prefer to see the Reconstruction Bill pass and loan growth begin to turn before adding exposure. We continue to review both markets for investment opportunities that align with our portfolio objectives.

A Region Re-Rating in Real Time

The region is entering a multi-year investment cycle with better political foundations, stronger commodity tailwinds, and more capacity for credit expansion than at any point in the past decade. Peru, Argentina, Chile, and Mexico each tell a different story, but the direction of travel is consistent. Markets like these, in many cases, re-rate quickly once the narrative becomes consensus. Identifying that inflection point ahead of the market is what our process aims to do.

How to Invest

The VanEck Emerging Markets Fund is built around direct engagement with management teams, central banks, and companies across the markets we cover, the same approach that underpins the convictions outlined in this piece. We look for high-quality businesses with structural growth potential that the market hasn't fully priced, across regions and sectors that don't always show up in the indices.