Key Points
— Brazil attracted $900 million in net inflows while $44 billion fled other emerging markets during the Iran conflict, and Goldman Sachs named it the top EM pick based on oil-exporter status and cheap equity valuations
— Mexico’s IPC index surged 6.22% in three days — its strongest rally of 2026 — with 34 of 35 constituents rising, signaling broad-based capital inflows rather than a single-stock story
— Goldman’s Kamakshya Trivedi identified a “terms-of-trade axis” in global FX, with energy exporters like Brazil, Norway, and Canada outperforming while importing economies in Europe and Asia weaken
Latin America safe havens are not a phrase investors expected to use in 2026, but the Iran conflict has rewritten the capital flow map. The Rio Times, the Latin American financial news outlet, reports that while $44 billion fled emerging markets in Asia and Eastern Europe following the escalation in the Middle East, the region’s two largest economies — Brazil and Mexico — have been absorbing capital at a pace that has surprised even Wall Street’s most bullish Latin America strategists.
Goldman Sachs strategist Kamakshya Trivedi identified the mechanism in a note to clients: global currencies are diverging strictly along a “terms-of-trade axis,” with energy exporters like Brazil, Norway, and Canada outperforming while energy-importing economies in Europe and Asia weaken. Both Brazil and Mexico sit on the right side of that divide — and capital is following the logic.
Brazil: Goldman’s Top Emerging Market Pick
Brazil recorded approximately $900 million in net inflows during the same period that saw massive outflows from Taiwan, South Korea, and India. Foreign investment into the B3 exchange totaled R$42.6 billion ($7.6 billion) in January and February alone — more than 1.5 times the entire 2025 annual figure. Goldman named Brazil its top EM pick, citing net oil exports of roughly two million barrels per day, equities at 9.6 times forward earnings, and expected 200 basis points of Selic cuts from 14.75 to 12.75 percent.
Goldman argues that as the Selic falls, domestic investors will rotate from fixed income into equities, compressing the valuation gap. The bank issued buy ratings on 14 Brazilian stocks spanning cyclicals like BTG Pactual, B3, and Nubank alongside defensives such as Equatorial Energia, Sabesp, and Rede D’Or.
Mexico: The IPC Explosion No One Expected
Mexico’s case is even more dramatic in the short term. The S&P/BMV IPC index surged 3.67 percent on March 25 to close at 68,187 — its strongest single session of 2026, with 34 of 35 index constituents closing higher.
The three-day rally totaling 6.22 percent erased most of March’s drawdown. That kind of breadth does not come from domestic retail — it signals institutional capital arriving in size.
The day before, the IPC had already gained 2.18 percent even as the S&P 500 fell 0.36 percent — a decoupling from Wall Street that Banco Base analyst Gabriela Siller called significant. América Móvil, Megacable, and Sigma Foods led the advance across telecom, infrastructure, and consumer sectors, suggesting rotation into Mexican domestics rather than a mechanical oil trade.
Why Latin America, Why Now
The structural argument is straightforward: Brazil produces two million barrels per day and exports roughly half, while Mexico produces 1.63 million and still ships over 400,000 barrels of heavy crude to the United States daily. When Brent trades above $100, both economies benefit through royalties, tax revenue, and currency strength. Their equity markets, trading below historical valuation averages, offer entry points that Asian and European markets cannot match.
Mexico adds a nearshoring dimension that Brazil lacks, with foreign direct investment reaching $36.9 billion in 2024 and government projections targeting $48 billion by 2026. The BMV still trades below its own historical average despite a 33 percent gain over 12 months, and the IPC hit an all-time high of 72,111 in February before the Iran selloff created the dip that investors are now buying.
Goldman’s Trivedi warned that the market is pricing the conflict as a short-term inflationary shock, not a prolonged disruption. If energy prices stay elevated, the capital reallocation toward commodity exporters could accelerate — and the numbers already tell a story that would have seemed improbable a year ago: in a world at war, Latin America’s two largest economies have become the destination, not the source, of capital flight.