Week 34, 2024 - Latin America

“When we love, we always strive to become better than we are." - Paulo Coelho (Brazilian novelist)

MARKETS

August 22, End Of Day

• Argentina S&P MERVAL Index = 1,577,419.84 (YTD = 69.67%)
• Brazil BOVESPA Index = 135,173.39 (YTD =0.74%)
• Chile S&P IPSA Chile = 3,509.88 (YTD = 1.22%)
• Colombia MSCI COLCAP = 1,334.96 (YTD = 11.69%)
• Mexico IPC Mexico BMV = 53,316.20 (YTD = -7.09%)
• Peru S&P/BVL Peru = 28,482.94 (YTD = 9.72%)

BUSINESS

Accelerating the Clean Hydrogen Economy in Latin America

As the global push towards decarbonization gains momentum, Latin America is emerging as a key player in the development of the clean hydrogen economy. The region's vast renewable energy resources position it uniquely to become a major exporter of clean hydrogen, contributing significantly to global efforts to reduce greenhouse gas emissions. Here are the three main takeaways from the recent report by World Economic Forum on Latin America's role in the clean hydrogen economy:

1. Latin America's Potential as a Global Hydrogen Exporter

• Renewable Energy Advantage: Latin America is endowed with significant renewable energy resources, including solar, wind, and hydroelectric power, which are crucial for producing cost-competitive clean hydrogen. Countries like Chile and Argentina are leading the charge, with Chile expected to produce the world's cheapest renewable hydrogen by 2050.
• Export Ambitions: Chile and Argentina are positioning themselves as major hydrogen exporters, with strategies focused on developing the necessary infrastructure, such as ports and hydrogen hubs, to facilitate international trade.

2. Challenges to Overcome

• Infrastructure Development: Despite its potential, the region faces significant challenges in developing the infrastructure needed to support a clean hydrogen economy. This includes the construction of dedicated transportation and storage facilities for hydrogen.
• Cost and Technology Barriers: The high cost of production, particularly for electrolysers, and the need for technology adaptation to local conditions are critical barriers that must be addressed to make clean hydrogen competitive with conventional fuels.

3. Strategic Pathways for Different Countries

• Diverse Approaches: The report identifies three strategic pathways that countries in Latin America might follow: becoming net exporters, focusing on local decarbonization, or adopting a targeted approach for specific industries. For instance, Brazil is prioritizing domestic use to decarbonize its economy, while Panama is focusing on the maritime sector.
• Collaboration and Coordination: Regional collaboration is highlighted as a key success factor. By working together, Latin American countries can overcome common challenges, align regulatory frameworks, and strengthen their position in the global hydrogen market.

Fundraising picks of the week

VREIX: VREIX is a mobile ERP designed for construction companies, addressing industry challenges such as poor control, inefficiency, and outdated information. The platform enables users to record and report data quickly directly from the construction site. Dive deeper into the case here.

Rentennials: Rentennials is a peer-to-peer carsharing platform that connects local vehicle owners with renters. The platform has over 600 cars available for rental and has facilitated more than 2,600 rentals across six countries. Rentennials achieved a 5x increase in revenue over the last year. Dive deeper into the case here.

Adelántalo: Adelántalo is revolutionizing the logistics industry in LatAm by providing immediate financial liquidity to underserved truckers. Their innovative platform offers same-day payments and embedded factoring, ensuring truckers get paid after unloading. Dive deeper into the case here.

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Dive deeper into other fundraising firms in LatAm here.

CURRENT AFFAIRS

Argentina: A potential MSCI upgrade of Argentina to emerging market status could attract nearly $1 billion in investment inflows, according to JPMorgan. This follows reforms under President Javier Milei aimed at stabilizing the economy. If reclassified, Argentina could see major firms like YPF and Banco Macro included in the MSCI Argentina Standard Index. JPMorgan expects easing of capital controls as macroeconomic conditions improve, possibly starting in the fourth quarter.

Paraguay: President Santiago Pe?a forecasts Paraguay's economy to grow by over 4% in 2024, surpassing the central bank's estimate of 3.8%, despite low soy prices. Strong investment and support for farmers, including improving waterways for grain exports, are driving this growth. Pe?a also anticipates potential sovereign debt rating upgrades by S&P and Fitch early next year, following a recent upgrade by Moody's. Paraguay is also progressing in its bid to join the OECD by 2028.

Mexico: Mexico could boost its GDP by $391 billion, or over 25%, if women's labor force participation matched that of men, according to a Milken Institute report. Key to this increase is improving access to childcare, as currently only 45.6% of working-age women are employed compared to 77.5% of men. President-elect Claudia Sheinbaum plans to address this by reinstating government-run early education centers.

FURTHER READING

Check our recently published insights here. Recent post:

?? E-commerce Innovations in Latin America:

E-commerce in Latin America is booming, driven by increased internet and mobile device usage, and evolving digital payment methods. With a market potential projected to reach $200 billion by 2025, although challenges like logistical complexities and regulatory variations persist.

Key Innovations Fueling Growth:

• ?? AI-Powered Personalization: Leveraging AI to tailor shopping experiences, enhancing product recommendations based on user behavior.
• ??? Social Commerce: Integrating shopping with social media platforms, allowing direct purchases from feeds, exemplified by Mercado Libre's Mercado Shops.
• ??? VR and AR: Utilizing immersive technologies to enhance the online shopping experience, like virtual try-ons and in-home product previews.
• ?? Blockchain: Increasing transaction security and supply chain transparency with blockchain technology, with initiatives like Mercado Libre’s Mercado Pago Token.
• ?? Sustainable E-commerce: Focusing on environmental sustainability in online retail, aiming to reduce the ecological footprint of digital commerce.

As digital transformation accelerates, these innovations are positioning Latin America's e-commerce sector for substantial growth and international competitiveness.

???Read more here.