Political risks are nothing new in Latin America. However, in the past business-friendly countries, the three major shocks that occurred within a few days reminded the company that even in accordance with the high standards of the region, risks are rising rapidly.

Traditionally moderate Chilean voters conducted the first round of voting Election victory The far-right José Antonio Kast is the most extreme presidential candidate who has achieved such strong results in three decades. Although his goal is to be business-friendly, if he wins the second round of elections, it will be difficult for him to govern because he lacks a foundation in Congress, and his radical stance may trigger more street protests.

Peru’s left-wing government Announce Without prior warning, it will close two copper mines owned by Hochschild Mining, which is listed in London, on environmental grounds. A few days later, it changed its mind again.

Mexican populist president warns the market give up He nominated a respected former Treasury Secretary Arturo Herrera (Arturo Herrera) to be the next central bank governor to support a lesser-known public sector economist who was loyal to him.

Investors in the region have long avoided socialist Venezuela, and Argentina has been a no-go zone for most foreign investors after long-term debt defaults and imposing prices and exchange rates. controlBut the three recent shocks have come from countries that are considered to be much better for companies, and this has frustrated bankers and executives.

Eric Farnsworth, vice chairman of the International Business Organization Council of the Americas, said: “There is a lot of haze outside.” “What really worries people is the sudden emergence of several long-term stable economies. problem.”

The most worrying is Mexico. After President Carlos Salinas de Gottari led the country to join the North American Free Trade Agreement in 1994, the business sector became accustomed to the widespread use of technocratic governments in different political fields.North American Free Trade Agreement and its successor agreements U.S. Marine CorpsThe reasoning is that it provides a solid institutional foundation.

Now, under the leadership of President Andrés Manuel López Obrador, this seems unclear.In focusing on the latest developments in the business, billions of dollars in renewable energy investments are at risk The proposed electricity reforms, This will give priority to state-owned generators powered by fossil fuels at the expense of the private sector.

Francisco Garza, CEO of GM’s local business, warn Speaking of the risks of these measures last month, said that although the company hopes to continue to invest in the country, “if the conditions do not meet our long-term vision, then obviously Mexico will not become a destination in the short term, unfortunately”.

Since the wave of street protests swept through Chile in October 2019, Chile has been proving the pessimists right.Its moderate Congress so far succumbed to the three independent demands of populism Early withdrawal Savings for private pension plans. The fourth is under discussion.

Elected assembly writing The new constitution is dominated by leftists and extreme leftists. It now has the potential to overturn an economic model that, although not perfect in distributing wealth, does produce some of the best economic growth in the region. Now, voters in the first round of the presidential election last weekend have abandoned the political center and turned the second round of elections in December into a choice between the extreme right and the extreme left.

Further afield in the Andes, Colombia’s traditionally stable business environment faces its biggest test so far in next year’s presidential election, ex-guerrillas on the radical left. Leading opinion polls.

The rest is Peru, where Pedro Castillo, a former rural elementary school teacher, led Chaotic management Split between the former Marxists and the more moderate left, and be plagued by scandals.The Peruvian Congress is so hostile to Castillo that it has discuss He was removed from office only four months later.

This is the political turmoil in Latin America. Even in the last year of the far-right Bolsonaro government, Brazil seems to be relatively hospitable to business, although the 2022 elections may be unusually divided and fiscal risks may rise.

“My personal view is that the political dynamics back and forth in Brazil will not have much impact on the transaction,” said a person involved in many large transactions in the region. “Whether it is [opposition leader] Lula or Bolsonaro, Brazil does not risk becoming the next Venezuela. “

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