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The IMF is worried about overheating in some Latin American economies, thanks to an “excessively stimulative environment”.

Although the institution is reluctant to label current conditions in the region’s largest markets bubbly, when it comes to credit growth the IMF acknowledges that concerns are rising about whether loan growth is becoming “excessive and eventually unsustainable.” Equity prices are also showing signs of “stretched valuations” in places like Chile, Colombia and Peru.

Despite being one of the region’s most active users of “macroprudential” measures to cool its economy, Peru stands out from the pack due to its rapid recent credit growth and, especially, sky-high equity valuations.

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By most measures, Brazil weathered the global financial crisis better than almost any other major economy. Amidst the economic turmoil in North America and Western Europe, Brazil saw its reputation enhanced among international investors. But when it comes to recent stock market performance, the São Paulo exchange is a laggard in comparison with some of its neighbours.

So far this year, investors have been richly rewarded in places like Chile, Peru, Colombia and even Argentina. In Bogotá, the IGBC index is up by 33% through early December. In Santiago, the IPSA has gained 39% over the same period, while the Merval in Buenos Aires has added 48%. But even these impressive performances have been surpassed by Lima’s red-hot IGBVL, up by 53% year-to-date. And it gets even better for investors looking for dollar returns, as local currencies in Latin America have been appreciating against the greenback.

Read more at Financial Services Briefing: “League leaders” (December 6th)

A “robust” recovery is underway for private equity in emerging markets, according to an industry group. The Emerging Markets Private Equity Association notes that buyouts in developing markets reached US$13bn in the first half of this year, up from US$8bn at the same time last year. The rise was driven mainly by activity in China, India and Latin America.

Fundraising is also ahead of last year, with some US$11bn raised in the first six months of 2010, a 22% increase on the previous year. Although investments remain modest in relation to other emerging regions, fundraising in sub-Saharan Africa in the first six months of 2010 surpassed the total raised in the whole of 2009.

The majority of data and analysis at Financial Services Briefing is available only to subscribers. Each week, a small share of content from the service is made available to non-subscribers.

International insurance groups are setting their sights on Latin America, drawn by rebounding economies and generally low insurance penetration rates.

Over the past year, insurance groups from North America, Western Europe and elsewhere have led a major push into the region. The scope for growth is “huge”, in the words of Max Capital Group, a Bermuda-based outfit that recently set up shop in Brazil and Colombia. Even so, these new entrants face competition from emboldened local players, including a few foreign-owned firms that made forays into the region well before its latest growth spurt.

Spain’s Mapfre, for example, claims to be Latin America’s largest non-life insurer—and third-largest insurer overall. Aggressive expansion in the region was viewed warily when investors were seized by risk aversion at the outset of the credit crunch. Now, Mapfre’s Latin American footprint is raising the insurer’s global profile. Others are trying to catch up.

Read more at Financial Services Briefing: “Venturing south” (January 21st)

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