Citigroup Eyes Latin Investments
NEW YORK (AP) -- Latin America has hit economic bottom and is ripe for reinvestment, according to an investment report by a Citigroup subsidiary.
''For the first time in quite a while we are recommending buying into a rally instead of selling in Latin fixed-income markets,'' said the report by the fixed-income research group at Citibank. The report was being released late Tuesday.
United States investors have been wary about Latin America since mid-summer, when huge economic problems came to light in Japan, the rest of Asia and Russia. Venezuela is already in recession and several other countries including Brazil are vulnerable.
Investors worried that it was a short hop from problems in Latin America to serious economic trouble in the United States.
But Citibank changed its own opinion on Latin America after two recent events. On Oct. 30, the world's seven largest industrial nations endorsed President Clinton's proposal to allow the International Monetary Fund to provide loans to countries before foreign investors begin fleeing.
Prior to that, on Oct. 28, President Fernando Henrique Cardoso of Brazil proposed a new austerity plan for his country that aims to save $84 billion over the next three years and cut the budget deficit significantly from its current high 7 percent of the country's gross domestic product.
Brazil hopes the plan will enable it to receive a $30 billion aid package from the IMF, which had insisted that the largest economy in Latin America come up with a tough and realistic way to slash its budget deficit as a prerequisite for a loan.
Despite likely delays in implementing the austerity program, Brazil is the most attractive investment target in the region, the report says, followed by Argentina, Mexico and Venezuela ''in that order,'' the Citibank report says.
The report counsels investors with extra cash to gradually begin investing in Latin America, and that investors already in the region should increase their positions.
At a meeting in Florida late last month with consumer bankers from around the country, John S. Reed, the co-chairman of Citigroup, said he believed a worldwide recession would be stopped at Latin America and not spread to the United States.
Reed, the former chairman of Citicorp, which merged last month with The Travelers Group to form Citigroup, cut his teeth in the banking business in Latin America and knows the region well.
Reed was leading Citicorp in the 1980s when the company was almost pulled under by a debt crisis in Latin America. But he was also credited with getting Citicorp back on its feet.
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