Why investors like Latin America’s inflation-beating ESG stocks

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By Michael Molinski, Callaway Climate Insights

(Michael Molinski is a senior economist at Trendline Economics. He’s worked for Fidelity, Charles Schwab and Wells Fargo, and previously as a foreign correspondent and editor for Bloomberg News and MarketWatch.)

SÃO PAULO (Callaway Climate Insights) — Latin American stocks led the world in January, and much of that is because oil, commodities, financials and gold — historically stocks that beat inflation over time — outperformed.

And many of those stocks excelled in ESG Ratings, stocks which had solid environmental, social and governance policies.

Latin American stocks rose 7.3% in last month, compared to a 1.9% drop in the MSCI Emerging Markets index and a 5.3% decline in the Developed Markets index for the period.

Metals, mining, oil, gold, commodities, real estate and financials were a big part of the outperformance of Latin America. The reason is simple: inflation is rising, and those sectors stand to benefit. Materials and commodity producers generally do well when inflation is on the uptick, with financials joining the party not long after. . . .

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